Investing

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.