Things are a bit quiet in analyst land, the chatter is a bit faint. So attention is turning to some of the resources and energy stocks. Deutsche has a buy on gold miner Medusa Mining, estimating that its earnings multiple will fall from 15.3 times this financial year to 6.2 times next financial year. On the face of it that is attractive:
We continue to see FY12 as a transition year given the decision to invest now for the future by sink the Saga Shaft directly to level 8 resulting in more development ore processed near term. As the lowest cost gold producer under coverage, it will close the valuation gap as it delivers on its planned production growth (FY14 200kozpa).
Deutsche also has a buy on Newcrest Mining, with a price target of $37.10. It, too, is expected to have a big fall in its earnings multiple next year, from 19.4 times to 11 times. And it is expected to pay a dividend yield of 2.2% next financial year. But there are questions over that:
Based on our 3Q gold production expectations, NCM will then need a strong 4Q of 682koz (DBe 644koz) to hit the bottom end of guidance. We note that the 4Q is usually a stronger quarter for the company due to maintenance schedules and more favourable weather conditions.
Not that today helped.
Macquarie looks at Northern Iron, with an outperform rating and a price target of $1.35. Return on equity is a healthy 38% and debt is negligible. The earnings multiple is expected to fall below three next financial year. The main question is the future of the iron ore price:
Operating cash flow increased strongly qoq and covered investment. NFE is executing its quality improvement plan, laying the ground for higher revenues per ton, while continuing to increase volumes; we forecast further increases in cash flow in the coming quarter as NFE ramps up to 2.8mtpa post mid-year. A key risk to our investment view is any near-term iron ore price weakness.
Macquarie has an outperform rating on Malopo Energy, but one has to wodner that, with the big surge of gas production in America, just how affected the Australian companies will be:
Following initial well results at the Fiesta project, it is clear that management see enough encouragement to justify additional capital expenditure. That said a conclusion regarding the Queensland CSG sales process will remain the near-term focus, particularly in light of growing funding concerns.