Stanmore Coal – Takeover bid well undervalued

Stanmore Coal (SMR) is currently subject to a $0.95/sh all cash takeover offer by Golden Investments Pte. Ltd, owned by Singapore based Golden Energy & Resources Ltd and Ascend Global Investment Fund. The Independent Expert report, released yesterday with SMR’s Target Statement, outlined a sum of parts valuation of $1.48-1.90/sh. While Golden Investments has acquired a 19.8% stake from Greatgroup Investments, we believe the Bidder will fall well short of the conditional 50% acceptance at the current offer price. SMR recently upgraded FY19 guidance from 1.8Mt to 2.0Mt at FOB costs of A$86/t generating EBITDA between $130-150m. Argonaut maintains a BUY recommendation with a revised target price of $1.66 (from $1.40).

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