Report Cover Page

Contents

Where are we in the Cycle?
There has been nothing to suggest a significant change in cyclical positioning with the absence of an upside global growth surprise being the dominant retarding influence. More...

Market Directions
Central bank monetary policies remain the most important day to day influence on markets with several upcoming policy making meetings set to impact outcomes in the days ahead.    More...

Portfolio Performance and Positioning
The smaller end of the sector has been holding up better than larger cap stocks which have been more susceptible to macro conditions. There were no material changes to the PortfolioDirect models with high cash positions continuing to reflect the absence of improved cyclical conditions.   More...

Stock Reviews and Rating Analysis
Pilbara Minerals (PLS:AU) has no track record but is priced for success. The company’s definitive feasibility study puts a A$709 million value on its Pilgangoora lithium project but the market value of the company is already $627 million implying a skinny 13% difference. The company is anticipating an average annual EBITDA over the life of the project of A$121 million. That sounds an impressive enough outcome but anything less than a five times EBITDA multiple would leave the company’s market value short of where it is now. Even a generous 6-7 multiple in four or five years once the company is demonstrating it can deliver its targeted profits consistently is, at best, only a 6% annual return. And that assumes no additional equity raising along the way.
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Although the statements of fact in this communication have been added from and are based upon sources E.I.M. Capital Managers Pty Ltd, the publisher, believes to be reliable, their accuracy is not guaranteed and any such information may be incomplete or condensed.

All opinions and estimates in this communication constitute judgments by E.I.M. Capital Managers as of the date of this communication and are subject to change without notice. The publisher is under no obligation to make public any change in view about any matter referred to in this or any linked documents.

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