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    Monday, May 19, 2008


    Valuing Felix Resource (FLX)

    I first wrote about felix in December 2005 noting that is was very undervalued and that there was a lot of upside in coal.

    Since then thermal coal prices have doubled and coking prices seem to have tripled. Having sold a few shares in the 7's I quickly revistied my valuation. The quick revist seemed to indicate a fair value price closer to $17. I spent some time today rebuilding my model based on the latest data from the company and a more detailed model of their business.

    It's pretty easy to make the case that the company is worth $25. I also worked out some sensitivities which others might find interesting.

    There are so many assumptions that go into such a model (you can see a number of them in the table above) but if anyone is interested i'm happy to post more of them. Importantly I assume AUD/USD parity.

    Anyway there is still plenty of upside in Felix as long as coal prices hold. I still believe that coal will not only keep up with oil but increase more than oil. Since my original analysis oil is up 166% and thermal coal has only doubled.

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    Here is my email address if anyone wants to contact me. I used to have a form but the site it was hosted on went away.


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    Disclaimer and Disclosure Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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