Tag Archives: Uranium

article 3 months old

Uranium Thin And Weak

By Greg Peel

It was three weeks ago when industry consultant TradeTech noted expectations from uranium market participants that buying interest would be limited for the time being. Uncertainties included the overhang of Japanese inventory, US plans to increase enrichment of tailings inventories, and general concern with regard to the world's post-Fukushima outlook on nuclear energy.

And last week we can throw in financial market turmoil.

So it is of little surprise that that buyer disinterest persisted last week, such that a total of one million pounds of U3O8 equivalent in seven transactions saw prices chased lower. By week's end, TradeTech had lowered its spot price indicator by US$1.25 to US$50.25/lb.

There was no new demand in the term market, and at the moment little in the way of catalysts to drive the uranium price higher. We recall from the immediate Fukushima price reaction, however, that there was buying interest triggered under US$50/lb. As to whether there are still buyers lurking at that level we may soon be about to find out.

article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

The volatility in equity markets in recent sessions has had a noticeable impact on broker ratings, as the FNArena database saw 42 ratings upgrades (unusually high) compared to just six downgrades in the past week. Total Buy recommendations from the eight brokers contained in the database now stands at 54.97%, up from 53.2% last week.

Among those enjoying upgrades in ratings were Oakton ((OKN)), following a profit result that while weak offered some evidence of a turnaround in the key Victorian market. Coca-Cola Amatil ((CCL)) also enjoyed some upgrades post its interim earnings result, reflecting defensive earnings growth and an improved valuation following market weakness.

An improved valuation following recent share price weakness sparked ratings increases for Transurban ((TCL)), while a better than expected result from Domino's Pizza ((DMP)) generated upgrades as brokers factor in further strong earnings growth in coming years. Others to receive upgrades during the week include Extract Resources (EXT)) and Navitas ((NVT)). 

A potential takeover from major shareholders Rio Tinto ((RIO)) and Mitsubishi have caused brokers to downgrade ratings on Coal and Allied ((CNA)), price targets also being adjusted to reflect the implied value of the proposal. 

Refinancing concerns are behind a downgrade in rating for The Reject Shop ((TRS)), while an initiation of coverage on Sandfire Resources ((SFR)) at Underweight has brought down average ratings on the company.

In terms of price targets, increases to forecasts for Domino's Pizza translated into higher price targets, while an increase in reserves at Extract saw one broker lift its target for that stock. Greater confidence in earnings in the coming year have resulted in a price target increase for Programmed Maintenance Services ((PRG)), while Transurban saw some modest increases to targets post its profit result.

On the other side of the ledger, Harvey Norman delivered lower 4Q sales and this was met by some cuts to earnings estimates and price targets, though there were no associated changes in ratings. Myer ((MYR)) suffered by association in terms of targets and estimates being reduced.

Tough retail conditions also saw cuts to targets for The Reject Shop, while a more significant downgrade in target for Oakton ((OKN)) by one broker offset some modest target increases elsewhere. Difficult market conditions have seen targets trimmed for Stockland ((SGP)), while a somewhat lower quality result has seen cuts to both earnings estimates and targets for Bendigo and Adelaide Bank ((BEN)). 

Changes to forex assumptions translated into higher earnings estimates for Aquila Resources ((AQA)) and Paladin ((PDN)), while estimates for Mount Gibson ((MGX)) were adjusted following a solid full year earnings result.

With BlueScope ((BSL)) announcing some writedowns brokers have responded by cutting earnings estimates, while Duet Group ((DUE)) announced a capital raising during the week and this has also seen changes to earnings forecasts as models are adjusted accordingly.

A weak outlook has resulted in cuts to estimates for Computershare ((CPU)), while a disappointing price for the sale of US assets has caused brokers to adjust numbers for Charter Hall Office ((CQO)) lower. 
 

Total Recommendations
Recommendation Changes

 

Broker Recommendation Breakup
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Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 OKN 40.0% 100.0% 60.0% 5
2 CCL 38.0% 88.0% 50.0% 8
3 DMP 33.0% 83.0% 50.0% 6
4 LEI - 25.0% 13.0% 38.0% 8
5 EXT 33.0% 67.0% 34.0% 3
6 TCL 71.0% 100.0% 29.0% 7
7 NVT 14.0% 43.0% 29.0% 7
8 AZT 50.0% 75.0% 25.0% 4
9 AQA - 50.0% - 25.0% 25.0% 4
10 CDI 25.0% 50.0% 25.0% 4

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 SFR 100.0% 33.0% - 67.0% 3
2 CNA 80.0% 20.0% - 60.0% 5
3 TRS 75.0% 50.0% - 25.0% 4
4 AIZ 100.0% 75.0% - 25.0% 4
5 WEB 50.0% 25.0% - 25.0% 4
6 BHP 75.0% 63.0% - 12.0% 8
7 IPL 71.0% 63.0% - 8.0% 8
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 DMP 6.670 6.965 4.42% 6
2 EXT 8.600 8.767 1.94% 3
3 CNA 121.200 123.500 1.90% 5
4 PRG 2.326 2.361 1.50% 7
5 PNA 4.527 4.587 1.33% 7
6 TCL 5.793 5.864 1.23% 7
7 APA 4.358 4.383 0.57% 8
8 CDI 0.563 0.565 0.36% 4
9 CFX 2.001 2.004 0.15% 7
10 PDN 3.193 3.194 0.03% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 HVN 3.084 2.778 - 9.92% 8
2 TRS 13.350 12.375 - 7.30% 4
3 OKN 2.536 2.354 - 7.18% 5
4 SGP 4.021 3.734 - 7.14% 7
5 BEN 9.879 9.240 - 6.47% 8
6 LEI 23.701 22.630 - 4.52% 8
7 MYR 3.054 2.941 - 3.70% 8
8 CQO 3.493 3.381 - 3.21% 7
9 SFR 8.565 8.293 - 3.18% 3
10 BHP 54.444 52.910 - 2.82% 8
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 AQA 6.000 11.867 97.78% 4
2 TCL 11.286 12.157 7.72% 7
3 PDN 5.602 6.020 7.46% 7
4 DMP 34.050 35.250 3.52% 6
5 MGX 42.600 43.214 1.44% 8
6 AGK 103.000 103.913 0.89% 8
7 CWN 52.988 53.363 0.71% 8
8 CHC 21.533 21.683 0.70% 6
9 QRN 16.263 16.375 0.69% 8
10 BKN 71.167 71.417 0.35% 6

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 SFR 12.000 - 3.233 - 126.94% 3
2 BSL 8.371 6.786 - 18.93% 7
3 DUE 14.100 12.763 - 9.48% 8
4 CPU 59.182 54.409 - 8.06% 7
5 CQO 26.686 24.686 - 7.49% 7
6 AIZ 10.700 9.938 - 7.12% 4
7 OKN 21.820 20.480 - 6.14% 5
8 JBH 145.463 138.738 - 4.62% 8
9 ALL 11.013 10.513 - 4.54% 8
10 CDI 5.000 4.775 - 4.50% 4
 

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article 3 months old

Uranium Drifting

By Greg Peel

One might be forgiven for fearing that by the end of last week, spot uranium may have been hit hard by festering economic fears in the US and Europe. Base metals certainly took a hit. However it was not the case.

Industry consultant TradeTech notes sellers were willing to push the price lower as the week progressed in order to find buyers, but by week's end the consultant's spot price indicator had fallen only US50c to US$51.50/lb. The week before saw a US25c rise.

A total of seven transactions were conducted for over 900,00lbs of U3O8 equivalent. Some buying interest has since emerged, nevertheless, with two non-US utilities seeking offers for a total of around 500,000lbs. There were no transactions conducted in the term market last week, TradeTech reports.

Last week Energy Resources of Australia ((ERA)) announced a decision not to go ahead with the heap leach facility it long had planned for its Ranger mine. The company also detailed substantial costs for the establishment of de-watering measures intended to prevent any further flooding at Ranger in severe wet weather events, as were experienced earlier this year.

Neither decisions were a surprise to analysts, and ERA has become very much a long term proposition. But even that proposition depends on the company's decision whether or not to go ahead with the Ranger Deeps underground mining expansion plan. With Jabiluka hopes apparently endlessly tied up in indigenous landowner opposition, it would seem ERA's sheer existence is all about a go ahead for the Deeps. Without it, ERA would most likely wind down. A handful of analysts are assuming a risk-weighted probability of approval in their valuations, although most analysts are now looking at ERA as a “binary” proposition. The Deeps project would be very valuable for the company, they acknowledge, but given the risk of a negative decision the stock cannot, in many eyes, be considered “investment grade”.

Prior to ERA's result, Paladin Energy ((PDN)) reported on its quarterly production. Delays experienced in the Kayelekera ramp-up and the Langer expansion in Namibia lead to disappointing results, and revenues were also hampered by lower uranium prices. There is a hope that Paladin has now ironed out most of its issues, but philosophically there are fears held for future global nuclear energy demand.

article 3 months old

Uranium Edges Up

By Greg Peel

Last week saw seven transactions completed in the spot uranium market, notes industry consultant TradeTech, totalling 700,000lbs. For the month of July, the score card was 28 transactions totalling 3.4mlbs.

While there remained a seller in the market last week seeking to offload 500,000lbs, the spot price did manage to tick up US25c to US$52.00/lb. That price represents a US50c increase on the end-June level. TradeTech reports that numbers of both buyers and sellers remain limited at present.

Sellers are facing difficulty in generating buying interest given lingering uncertainty in the global uranium market. It is still not known just what additional supply will hit the market from Japan where nuclear power generation has been curbed. Nor is the outcome yet known for the Whitfield bill currently on its way through US Congress which seeks to further boost activity in re-enriching tailings stockpiled by the US government. That product will then be sold into the market to fund further environmental clean-up operations in the US.

There were a total of four term market transactions reported in the month of July, with three concluded last week, but no new demand has since emerged. TradeTech's term price indicators remain at US$58/lb (medium) and US$68.00/lb (long).

article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

In the past week the FNArena database has seen 18 upgrades and 18 downgrades to recommendations by the eight brokers covered in the database, the result being the total proportion of Buy recommendations ended the week relatively flat at 53.7%. (There are other factors impacting on these numbers such as brokers temporarily going "no rating" in case of a take-over and initiations of coverage on new stocks).

On the buy side, upgrades to ratings were enjoyed by Woolworths ((WOW)), Independence Group ((IGO)), Australand ((ALZ)), Premier Investments ((PMV)) and Gindalbie ((GBG)), with improved valuation the primary factor underpinning the changes. For Premier there was also an overall favourable response to news of a strategic review designed to generate improved earnings performance.

Downgrades were experienced by ConnectEast ((CEU)), Aston Resources ((AZT)) and PanAust ((PNA)) on valuation grounds. Alesco ((ALS)) also saw a rating downgrade post its full year earnings result, this on evidence of better value elsewhere among stocks exposed to the property and building sector. 

With respect to consensus price targets, ConnectEast saw an increase as brokers adjusted targets in line with a bid for the company, while the likes of Regis Resources ((RRL)), Campbell Brothers ((CPB)) and Mount Gibson also saw targets raised. The Campbell Brothers increase followed an increase in interim earnings guidance from management, which also saw earnings estimates revised higher.

On the other side of the ledger, targets for Paladin ((PDN)) were cut following a poor June quarter production result, while the strategic review announcement from Premier also saw some brokers adjust earnings estimates and price targets lower.

Targets for Austar ((AUN)) were lowered when the proposed takeover by Foxtel was brought into question by the ACCC announcing it had some issues with the proposal, while retail stocks such as Harvey Norman ((HVN)) and Myer ((MYR)) continue to see brokers fine tune their expectations given ongoing tough retail trading conditions.

Gindalbie ((GBG)) was a beneficiary of increased iron ore price estimates that have seen earnings forecasts for the company increase, as was Aquila Resources ((AQA)), but to a lesser extent. Forecasts for Virgin Blue ((VBA)) and TPG Telecom ((TPM)) were also increased as brokers adjusted models for a trading update from the former and an acquisition by the latter. 

With production expectations for Paladin being revised lower so too have been earnings forecasts, while higher cash costs have seen a trimming of estimates for PanAust. Alesco's earnings forecasts have been adjusted to reflect full year results and the still tough market for the company, while earnings for Australian Worldwide Exploration ((AWE)) were lowered after the company revised down reserves at the Tui oil field.  

Total Recommendations
Recommendation Changes

 

Broker Recommendation Breakup

 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 WOW 38.0% 63.0% 25.0% 8
2 IGO 25.0% 50.0% 25.0% 4
3 CNA 60.0% 80.0% 20.0% 5
4 ALZ 33.0% 50.0% 17.0% 6
5 PMV 33.0% 50.0% 17.0% 6
6 PPC 83.0% 100.0% 17.0% 6
7 GBG 83.0% 100.0% 17.0% 6
8 NWS 33.0% 50.0% 17.0% 6
9 CHC 67.0% 83.0% 16.0% 6
10 CPB 17.0% 33.0% 16.0% 6

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 CEU 33.0% - 17.0% - 50.0% 6
2 PNA 67.0% 33.0% - 34.0% 6
3 NHC 67.0% 33.0% - 34.0% 3
4 PAN 100.0% 67.0% - 33.0% 3
5 AZT 100.0% 75.0% - 25.0% 4
6 ALS 100.0% 80.0% - 20.0% 5
7 MAP 67.0% 50.0% - 17.0% 6
8 RRL 50.0% 33.0% - 17.0% 3
9 PRT 33.0% 17.0% - 16.0% 6
10 WHC 33.0% 17.0% - 16.0% 6
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 CEU 0.480 0.538 12.08% 6
2 RRL 2.560 2.850 11.33% 3
3 CPB 47.907 49.355 3.02% 6
4 MGX 2.318 2.374 2.42% 8
5 WHC 6.683 6.842 2.38% 6
6 AZT 11.530 11.780 2.17% 4
7 ANN 14.271 14.573 2.12% 7
8 AGO 4.193 4.279 2.05% 7
9 VBA 0.394 0.400 1.52% 7
10 ILU 19.828 20.088 1.31% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 PDN 4.023 3.193 - 20.63% 7
2 PMV 6.433 5.947 - 7.55% 6
3 AUN 1.415 1.318 - 6.86% 8
4 MYR 3.210 3.054 - 4.86% 8
5 HVN 3.234 3.084 - 4.64% 8
6 PAN 2.707 2.600 - 3.95% 3
7 ALS 3.480 3.350 - 3.74% 5
8 WBC 25.170 24.233 - 3.72% 8
9 WES 35.475 34.171 - 3.68% 8
10 ALZ 3.090 2.985 - 3.40% 6
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 GBG 0.071 0.786 1007.04% 6
2 VBA 2.686 2.957 10.09% 7
3 TPM 9.300 10.225 9.95% 4
4 AQA 7.825 8.325 6.39% 4
5 CPB 264.283 278.200 5.27% 6
6 SIP 2.886 3.029 4.95% 7
7 AIZ 10.440 10.703 2.52% 4
8 HZN 2.776 2.841 2.34% 4
9 OSH 13.828 14.132 2.20% 8
10 HGG 17.745 18.026 1.58% 5

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 PDN 9.145 5.618 - 38.57% 7
2 PMV 39.050 32.365 - 17.12% 6
3 PAN 28.350 25.600 - 9.70% 3
4 ALS 34.133 31.133 - 8.79% 5
5 MGX 48.888 45.261 - 7.42% 8
6 AWE 11.386 10.586 - 7.03% 7
7 NCM 208.788 194.438 - 6.87% 8
8 PNA 38.439 35.977 - 6.40% 6
9 MAP 8.659 8.116 - 6.27% 6
10 WHC 41.550 39.017 - 6.10% 6
 

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article 3 months old

Uranium Remains Under Pressure

By Greg Peel

Industry consultant TradeTech noted the week before last that buying in the spot uranium market had become “highly discretionary” and that participants were expecting flat to weaker prices in the near term. That scenario played out last week as a new order to sell 500,000lbs of U3O8 equivalent through to October caused existing sellers to tick down prices to encourage buying.

Producers were the sellers last week and utilities were the buyers, with traders also in on both sides, TradeTech reports. By week's end five transactions had been completed at reducing prices, totalling 750,000lbs of U3O8 equivalent.

TradeTech's weekly price indicator has fallen US$1.50 to US$51.75/lb. There were no deals in the term market where indicative prices remain US$58/lb (medium) and US$68/lb (long).

article 3 months old

Criticality Is In The Eye Of The Beholder

By Richard (Rick) Mills
Ahead of the Herd

As a general rule, the most successful man in life is the man who has the best information

The Earth's climate has been continuously changing throughout its history. From ice covering large amounts of the globe to interglacial periods where there was ice only at the poles - our climate and biosphere has been in flux for millennia.

This temporary reprieve from the ice we are now experiencing is called an interglacial period – the respite from the cold locker began 18,000 years ago as the earth started heating up and warming its way out of the Pleistocene Ice Age.

Approximately every 100,000 years or so our climate warms up temporarily.

These interglacial periods usually last somewhere between 15,000 to 20,000 years before another ice age starts. Presently we’re at year 18,000 of the current warm spell.

Serbian astrophysicist Milutin Milankovitch is best known for developing one of the most significant theories relating to Earths motions and long term climate change.

Milankovitch developed a mathematical theory of climate change based on the seasonal and latitudinal variations in the solar radiation received by the Earth from our Sun - it was the first truly plausible theory for how minor shifts of sunlight could make the entire planet's temperature swing back and forth from cold to warm.

Milankovitch’s Theory states that as the Earth travels through space around the sun, cyclical variations in three elements of Earth/sun/geometry combine to produce variations in the amount of solar energy that reaches us. These three elements are:

 - Variations in the Earth's orbital eccentricity - the shape of the orbit around the sun, a 100,000 year cycle
 - Changes in obliquity or tilt of the earth’s axis - changes in the angle that Earth's axis makes with the plane of Earth's orbit, a 41,000 year cycle
 - Precession - the change in the direction of the Earth's axis of rotation, a 19,000 to 23,000 year cycle

These orbital processes are thought to be the most significant drivers of ice ages and, when combined, are known as Milankovitch Cycles.

Other Climate Change Drivers:

 - Changes occurring within the sun affects the intensity of sunlight that reaches the Earth's surface. These changes in intensity can cause either warming - stronger solar intensity - or cooling when solar intensity is weaker.
 - Volcanoes often affect our climate by emitting aerosols and carbon dioxide into the atmosphere. Aerosols block sunlight and contribute to short term cooling, but do not stay in the atmosphere long enough to produce long term change. Carbon dioxide (CO2) has a warming effect. For about two-thirds of the last 400 million years, geologic evidence suggests CO2 levels and temperatures were considerably higher than present. Each year 186 billion tons of carbon from CO2 enters the earth's atmosphere - six billion tons are from human activity, approximately 90 billion tons come from biologic activity in earth's oceans and another 90 billion tons from such sources as volcanoes and decaying land plants

These climate change “drivers” often trigger additional changes or “feedbacks” within the climate system that can amplify or dampen the climate's initial response to them:

 - The heating or cooling of the Earth's surface can cause changes in greenhouse gas concentrations - when global temperatures become warmer, CO2 is released from the oceans and when temperatures become cooler, CO2 enters the ocean and contributes to additional cooling.

During at least the last 650,000 years, CO2 levels have tracked the glacial cycles - during warm interglacial periods, CO2 levels have been high and during cool glacial periods, CO2 levels have been low

 - The heating or cooling of the Earth's surface can cause changes in ocean currents. Ocean currents play a significant role in distributing heat around the Earth so changes in these currents can bring about significant changes in climate from region to region

In 1985 the Russian Vostok Antarctic drill team pulled up cores of ice that stretched through a complete glacial cycle. During the cold period of the cycle CO2 levels were much lower than during the warm periods before and after. When plotted on a chart the curves of CO2 levels and temperature tracked one another very closely – methane, an even more potent greenhouse gas, showed a similar rise and fall to that of CO2.

Small rises or falls in temperature - more, or less sunlight - seemed to cause a rise, or fall, in gas levels. Changing atmospheric CO2 and methane levels physically linked the Northern and Southern hemispheres, warming or cooling the planet as a whole. In the 1980s the consensus was that Milankovitch’s Cycles would bring a steady cooling over the next few thousand years.

As studies of past ice ages continued and climate models were improved worries about a near term re-entry into the cold locker died away – the models now said the next ice age would not come within the next ten thousand years.

It’s obvious that the orbital changes, as explained by Milankovitch’s Theory, initiate a powerful feedback loop. The close of a glacial era comes when a shift in sunlight causes a slight rise in temperature - this raises gas levels over the next few hundred years and the resultant greenhouse effect drives the planet's temperature higher, which drives a further rise in the gas levels and so on.

The exact opposite happens when sunlight weakens, we get a shift from emission to absorption of gases which causes a further fall in temperature... and so forth.

How Higher Temperatures effect Food Production

The study Climate Trends and Global Crop Production Since 1980 compared yield figures from the Food and Agriculture Organization (FAO) with average temperatures and precipitation in major growing regions.

Results indicated average global yields for several of the crops studied responded negatively to warmer temperatures. From 1981 - 2002, warming reduced the combined production of wheat, corn, and barley - cereal grains that form the foundation of much of the world's diet - by 40 million metric tons per year.

The authors said the main value of their study was that it demonstrated a clear and simple correlation between temperature increases and crop yields at the global scale.

"Though the impacts are relatively small compared to the technological yield gains over the same period, the results demonstrate that negative impacts are already occurring." David Lobell, lead researcher

Other researchers who focused on wheat, rice, corn, soybeans, barley and sorghum (these crops account for 55 percent of non-meat calories consumed by humans and contribute more than 70 percent of the world's animal feed) reported that each had a critical temperature threshold above which yields started plummeting, for example: 29°C for corn and 30°C for soybeans. At the International Rice Research Institute in the Philippines scientists have found that the fertilization of rice seeds falls from 100 per cent at 34 degrees to near zero at 40 degrees.

By 2050, the world's population is expected to reach around nine billion - minimum and maximum projections range from 7.4 billion to 10.6 billion.

"Future food-production increases will have to come from higher yields. And though I have no doubt yields will keep going up, whether they can go up enough to feed the population monster is another matter. Unless progress with agricultural yields remains very strong, the next century will experience sheer human misery that, on a numerical scale, will exceed the worst of everything that has come before". Norman Borlaug, father of the Green Revolution

Unfortunately the Green Revolutions high yield growth is tapering off and in some cases declining. So far this is mostly because of an increase in the price of fertilizers, other chemicals and fossil fuels, but also because the overuse of chemicals has exhausted the soil and irrigation has depleted water aquifers.

If we are to stay in this current inter-glacial period for up to another 10,000 years, as current climate models predict, are we going to see regular occurrences of temperatures rising above plants critical flowering thresholds?

Considering population growth, draining of fresh water aquifers and declining plant yields it seems as if the supplies for drinking water/irrigation, and food, are going to come under increasing pressure while at the same time demand is going to increase.

Nuclear power (while reducing greenhouse gases in the atmosphere) where used for desalination of seawater would supply fresh water for the most parched areas of the globe while reliving strain on area aquifers. Farmers are going to have to grow more food on less acreage which means increased use of fertilizers.

Rare Earth Elements (REE) applications are highly specific and substitutes are inferior or unknown. REE are environmentally friendly, reducing CO2 levels, and are going to continually come under greater supply pressure as demand increases, for example:

 - Rechargeable batteries
 - Automotive pollution control catalysts
 - Neodymium is key to the permanent magnets used to make high-efficiency electric motors. Two other REE minerals - terbium and dysprosium – are added to neodymium to allow it to remain magnetic at high temperatures
 - Y, La, Ce, Eu, Gd, and Tb are used in the new energy-efficient fluorescent lamps. These energy-efficient light bulbs are 70% cooler in terms of the heat they generate and are 70% more efficient in their use of electricity
 - Rare-earth elements are used in the nuclear industry in control rods, as dilutants, and in shielding, detectors and counters
 - Rare metals lower the friction on power lines, thus cutting electricity leakage

The rechargeable power needs of our modern society has made lithium a serious player in the commodity markets, and no segment is more important than electric vehicles (EVs). EVs have far fewer moving parts than Internal Combustion Engine (ICE) gasoline-powered cars - they don't have mufflers, gas tanks, catalytic converters or ignition systems, there’s also never an oil change or tune-up to worry about getting done. Plug and go, pretty convenient and very green!?

But the clean and green doesn’t end there - electric drives are more efficient then the drives on ICE powered cars. They are able to convert more of the available energy to propel the car therefore using less energy to go the same distance. And applying the brakes converts what was simply wasted energy in the form of heat to useful energy in the form of electricity to help recharge the car’s batteries.
Are nuclear energy, fertilizers, lithium and rare earths on your radar screen?

If not, maybe they should be.

Richard (Rick) Mills?
rick@aheadoftheherd.com?
www.aheadoftheherd.com

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article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

In a big week for ratings upgrades the FNArena database has recorded a total of 24 ratings increases in the week ending on Friday 25th July, against just 11 downgrades. This brings the total proportion of Buy ratings on stocks covered by the eight brokers in the database to 53.9%, up from 53.2% last week.

One stock enjoying upgrades to ratings during the week was Coal and Allied ((CNA)), a largely in-line quarterly production report being boosted by changes to coal price assumptions and recent share price weakness to generate two broker upgrades.

Super Retail ((SUL)) was also upgraded on relative valuation grounds following ongoing reviews of the retail sector, while recent share price weakness improving the value on offer was behind upgrades for Independence Group ((IGO)) and Flight Centre ((FLT)).

Gindalbie ((GBG)) has addressed some of its equity requirements by announcing a raising and this was enough to prompt one upgrade in rating, others enjoying upgrades over the past week include Peet ((PPC)), Macquarie Group ((MQG)) and REA Group ((REA)).

Retail stocks dominated the downgrades side of the ledger as brokers adjusted models following last week's downgrade to earnings guidance from David Jones ((DJS)). Aside from DJS, Premier Investments ((PMV)) and Myer ((MYR)) experienced downgrades, while more difficult operating conditions similarly saw ratings for GWA Group  ((GWA)) and Paladin ((PDN)) lowered.

In terms of changes to price targets during the week, increases were all relatively small in magnitude and reflect modest changes to earnings forecasts. Those with targets increasing included Super Retail, Gindalbie and Iluka ((ILU)).

It was a different story for decreases to consensus price targets, with revised estimates across the retail sector seeing targets cut by 7-23% for the likes of David Jones, Myer, Premier Investments and Harvey Norman ((HVN)). In keeping with its downgrade in rating Paladin also experienced a near 20% cut in consensus price target, this reflecting ongoing production issues.

In contrast to Paladin, Energy Resources of Australia ((ERA)) enjoyed some increases to earnings forecasts to reflect management lifting annual production guidance following the re-starting of operations.

Eastern Star Gas's earnings forecasts also rose during the week, while Iluka also enjoyed a modest overall increase in earnings forecasts. Those companies experiencing cuts to earnings estimates included Coal and Allied given changes to underlying assumptions, while Rio Tinto ((RIO)) and Santos ((STO)) also faced cuts following what in both cases were mixed June quarter production reports.

 

Total Recommendations
Recommendation Changes

 

Broker Recommendation Breakup

 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 SUL 17.0% 50.0% 33.0% 6
2 WOW 38.0% 63.0% 25.0% 8
3 IGO 25.0% 50.0% 25.0% 4
4 FLT 63.0% 88.0% 25.0% 8
5 CNA 40.0% 60.0% 20.0% 5
6 NWS 33.0% 50.0% 17.0% 6
7 PPC 83.0% 100.0% 17.0% 6
8 GBG 67.0% 83.0% 16.0% 6
9 REA 43.0% 57.0% 14.0% 7
10 ANN 29.0% 43.0% 14.0% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 CEU 33.0% - 17.0% - 50.0% 6
2 NHC 67.0% 33.0% - 34.0% 3
3 PMV 50.0% 17.0% - 33.0% 6
4 ESG 75.0% 50.0% - 25.0% 4
5 GWA 67.0% 50.0% - 17.0% 6
6 RRL 50.0% 33.0% - 17.0% 3
7 MAP 67.0% 50.0% - 17.0% 6
8 AUB 75.0% 60.0% - 15.0% 5
9 PDN 57.0% 43.0% - 14.0% 7
10 STO 88.0% 75.0% - 13.0% 8
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 CEU 0.480 0.538 12.08% 6
2 RRL 2.560 2.850 11.33% 3
3 SUL 7.358 7.575 2.95% 6
4 ANN 14.271 14.600 2.31% 7
5 WOW 29.446 29.725 0.95% 8
6 MAP 3.555 3.586 0.87% 6
7 NWS 20.400 20.450 0.25% 6

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 PDN 4.023 3.193 - 20.63% 7
2 PMV 6.742 6.183 - 8.29% 6
3 HVN 3.315 3.084 - 6.97% 8
4 GWA 3.460 3.228 - 6.71% 6
5 GBG 1.158 1.098 - 5.18% 6
6 MYR 3.210 3.054 - 4.86% 8
7 ABC 3.535 3.384 - 4.27% 8
8 WBC 25.170 24.233 - 3.72% 8
9 WES 35.475 34.171 - 3.68% 8
10 ANZ 25.844 24.906 - 3.63% 8
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 ROC 1.701 2.996 76.13% 4
2 HZN 2.780 4.068 46.33% 4
3 TPM 9.300 10.225 9.95% 4
4 AWE 10.957 11.571 5.60% 7
5 HGG 17.294 18.058 4.42% 5
6 NWH 22.700 23.700 4.41% 3
7 ILU 111.263 114.100 2.55% 8
8 NWS 128.147 131.305 2.46% 6
9 SUL 51.733 52.867 2.19% 6
10 FLT 179.600 183.525 2.19% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 PDN 9.165 5.631 - 38.56% 7
2 GBG 0.529 0.343 - 35.16% 6
3 GRR 13.850 11.350 - 18.05% 4
4 STO 58.913 49.713 - 15.62% 8
5 WDC 70.838 63.238 - 10.73% 8
6 FMG 80.506 72.735 - 9.65% 8
7 WHC 41.550 38.400 - 7.58% 6
8 NCM 207.963 194.438 - 6.50% 8
9 CNA 792.280 741.000 - 6.47% 5
10 MAP 8.659 8.116 - 6.27% 6
 

Technical limitations

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article 3 months old

Uranium Market Tentative

By Greg Peel

The spot uranium price rebounded somewhat the week before last once a big sell order cleared the market. But demand remains highly discretionary, reports industry consultant TradeTech, and sellers were more willing to lower prices last week.

There were five transactions concluded in the spot market last week totalling 500,000 lbs of U3O8 equivalent, and by week's end TradeTech had dropped its weekly spot indicator by US50c to US$53.25/lb.

The majority of buyers expects the spot market to remain flat or trend slightly lower in coming weeks, TradeTech reports, and are thus extremely reticent to commit.

There were no new deals in the term market.

article 3 months old

Top Ten Weekly Recommendation, Target Price, Earnings Forecast Changes

By Chris Shaw

Despite falls in equity prices over the past week the number of Buy ratings for Australian equities by the eight brokers under daily coverage in the FNArena database has barely moved, coming in at 53.2% this week against 53.1% last week. In total there were 17 upgrades and 18 downgrades in the period. The question as to why the number of Buy ratings still increased a little is answered through new initiations and re-initiations of coverage.

Among those enjoying a ratings upgrade were Bradken ((BKN)), which saw two brokers move to Buy from Neutral previously after the company announced the acquisitions of Norcast and Australian and Overseas Alloys.

Westfield Group ((WDC)) also enjoyed some upgrades during the week, this reflecting improved valuation and the potential for value creation assuming some US assets are sold as expected. Improved valuation following recent share price weakness was also behind upgrades for Coal and Allied ((CNA)) and Cochlear ((COH)).

On the flip side, better relative valuation elsewhere following solid performance by Australian office REITs has seen Dexus ((DXS)) cop more downgrades than upgrades in the past week, while reduced earnings guidance and weaker outlook commentary has seen ratings for David Jones ((DJS)) lowered on balance. The department store operator issued a shock profit warning mid-week that had noticeable repercussions for about everyone with consumer exposure in the share market.

Automotive Holdings ((AHE)) saw one downgrade from what had been a full complement of Buy ratings, this reflecting the expectation earnings will be impacted by the effect on auto sales of the mixed Australian economy and the recent natural disasters in Japan.

Along with its rating upgrades, Bradken received one of the only increase to earnings forecasts of note during the week, as brokers factor the newly acquired businesses into earnings models. Earnings estimates for Energy Resources of Australia ((ERA)) were also increased as management unexpectedly lifted full year production guidance. It has been a tough year for what once upon a time was Australia's leading producer of yellow cake.

Brokers went the other way on Rio Tinto ((RIO)) and lowered earnings forecasts post a mixed 2Q production report, while it was a similar story for Coal and Allied following a quarterly production report that highlighted some short-term headwinds.

With earnings estimates increased price targets for Bradken rose by the most during the week, increasing by around 7%. Minor increases to price targets were also enjoyed by Cardno ((CDD) and Transurban ((TCL)), reflecting an acquisition for the former and a quarterly traffic report for the latter.

With targets still being adjusted lower for Murchison Metals ((MMX)) following its update on the OPR and Jack Hills projects, the company saw the largest decrease in consensus price target, while David Jones and Automotive Holdings also experienced consensus target declines from changes to earnings estimates. Investors should note that while earnings forecasts for David Jones fell by more than 8% for FY11, following the shock announcement, the impact on further out earnings has materialised in double digits.

As with Murchison Metals this week, the impact on David Jones of its revised guidance should continue to flow through next week as more broker models are updated.

 

Total Recommendations
Recommendation Changes

 

Broker Recommendation Breakup

 

Recommendation

Positive Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 BKN 0.670 1.000 0.33% 6
2 WDC 0.710 1.000 0.29% 7
3 CNA 0.200 0.400 0.20% 5
4 BTT 0.500 0.670 0.17% 3
5 COH - 0.290 - 0.140 0.15% 7
6 TCL 0.570 0.710 0.14% 7
7 FMG 0.750 0.880 0.13% 8
8 TEL 0.250 0.380 0.13% 8
9 STO 0.750 0.880 0.13% 8
10 TTS 0.250 0.380 0.13% 8

Negative Change Covered by > 2 Brokers

Order Symbol Previous Rating New Rating Change Recs
1 DXS 0.500 0.140 - 0.36% 7
2 MMX - 0.330 - 0.670 - 0.34% 3
3 DJS 0.380 0.130 - 0.25% 8
4 AHE 1.000 0.750 - 0.25% 4
5 CDD 0.500 0.330 - 0.17% 3
6 NWS 0.500 0.330 - 0.17% 6
7 MGX 0.860 0.750 - 0.11% 8
 

Target Price

Positive Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 BKN 9.240 9.893 7.07% 6
2 NWS 19.650 20.400 3.82% 6
3 CDD 6.198 6.363 2.66% 3
4 TCL 5.707 5.793 1.51% 7
5 FMG 7.975 8.075 1.25% 8
6 STO 17.198 17.404 1.20% 8
7 AIO 1.979 1.985 0.30% 8
8 APA 4.345 4.358 0.30% 8
9 TSE 3.814 3.822 0.21% 6
10 WDC 10.079 10.090 0.11% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous Target New Target Change Recs
1 MMX 1.327 0.560 - 57.80% 3
2 DJS 4.813 4.413 - 8.31% 8
3 AHE 2.895 2.745 - 5.18% 4
4 MGX 2.391 2.318 - 3.05% 8
5 BTT 2.960 2.900 - 2.03% 3
6 DOW 4.519 4.433 - 1.90% 7
7 CNA 128.600 127.000 - 1.24% 5
8 ABC 3.560 3.535 - 0.70% 8
9 COH 76.290 75.959 - 0.43% 7
10 DXS 0.932 0.929 - 0.32% 7
 

Earning Forecast

Positive Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 ERA - 14.950 - 3.463 11.50% 8
2 BKN 64.133 71.167 7.00% 6
3 SVW 77.080 78.920 1.80% 5
4 AZT - 3.825 - 3.150 0.70% 4
5 ASX 217.300 217.971 0.70% 7
6 FMG 80.049 80.562 0.50% 8
7 SHL 85.688 86.138 0.50% 8
8 BXB 45.535 45.945 0.40% 8
9 SGM 133.529 133.843 0.30% 7
10 ANN 99.687 99.916 0.20% 7

Negative Change Covered by > 2 Brokers

Order Symbol Previous EF New EF Change Recs
1 RIO 1020.623 996.326 - 24.30% 8
2 CNA 820.380 798.540 - 21.80% 5
3 BHP 491.483 483.449 - 8.00% 8
4 MQG 337.786 331.786 - 6.00% 7
5 MCC 104.663 100.300 - 4.40% 8
6 GCL 79.400 75.300 - 4.10% 5
7 WPL 185.926 182.495 - 3.40% 8
8 LLC 84.386 82.271 - 2.10% 7
9 MND 120.533 118.467 - 2.10% 6
10 CSL 197.675 195.775 - 1.90% 8
 

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.