1.
Can you kill it?
Cyclicality and spurts of growth can be mistaken for quality.
***Slowdown in US (Very less chance)
***One black swan like Mining Ban
***Increase in Royalty
***Supplier might FORWARD INTEGRATE/EXPORT
***Regulatory issues might crop up
2
Is the company’s success depends on subsidies, loopholes or tax treatment, it’s vulnerable.
VERY LOW ROYALTY hence high OPM ,NPM
Govt Intervention in mining
3
Reason for Purchase:-
Increase in demand domestically and internationally(US Recovery) too
Good Quarterly Report(Base Effect)
4
Is management honest?
Yes Put there own Money in business
5
Catalysts?
***I think catalyst might be over.
***Price appreciation is too early too much
***It shows good quarterly report might be due to low base
***Huge debt
***All profit for next few years will go to serve debt
***If company try to reinvest it will have to keep debt on books
6
For such companies we need to be very careful
Need to monitor>>>>
1..Debt
2..Interest Coverage
3..Is there any capex?
4..How company finance capex?
5..Royalty issues
6..Any Environmental issue
7..How long query ie…mines will last ie..2018
8..US Mkt Recovery
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