Oxiana (OXR) Update

Submitted by Share Trading on 17 April, 2008 - 13:39

Oxiana (OXR) has a Neutral stock recommendation and a share price target of $4.00 from Australian share analyst Macquarie Research Equities.

OXR: Trading Idea - Oxiana

Oxiana (OXR) - Neutral
Current Price: $3.43
Target Price: $4.00 (~16.61% Upside)
P/E: 14.3 X
Div Yield: 2.4% (100% Franked)

Oxiana (OXR) Technicals:

OXR has recently broken through resistance at $3.20 and having now broken the critical technical level around $3.30 could be set for a run. It has twice faltered at this point in the last month, but MRE suggests that the solid 1Q08 production numbers released yesterday could be enough for it to take its next leg up.

Trading Chart Source: IRESS
Past performance is not a reliable indicator of future performance.

Oxiana (OXR)Fundamental View:

Macquarie Research Equities (MRE) Fundamental View:

  1. OXR had a solid 1Q08 production result with stronger than expected copper and gold offset by lower zinc production at Golden Grove
  2. Costs were in line and 2008 production and cost guidance was maintained…. A solid result in MRE’s view given the current environment
  3. Production was delayed at Prominent Hill from 3Q to 4Q due to the delayed delivery of a critical path item for the mill there. MRE views this delay as largely expected and not overly material
  4. MRE notes potential EPS upside of up to 15% if spot copper prices are maintained for the balance of 2008
  5. It is worth noting that the ZFX discount to the implied bid has widened from 2% to 6% recently on the divergence of copper and zinc prices. This could suggest OXR is relatively more attractive now on a stand-alone basis to a potential suitor. While MRE’s base case is that the merger will be successful, current thematics suggest chances of a bid for OXR from another suitor have increased.
  6. Catalyst: Completion of ZFX merger / Commissioning of Prominent Hill in Nov.