Post by
Nawaralsaadi on Apr 23, 2014 10:02am
A close above $5.24 would be a turning point
Canexus has not traded above $5.24 since March 7th , the first trading day after the CEO was fired. Prior to that announcement CUS traded between $5.8 and $6.2 even though it had already warned on the cost overruns, warned on Q4 results and priced a secondary. In truth nothing has changed since then except for the 60 to 90 days shut down scheduled for June, however we also know today that KXL has been delayed indefinitely, which in my opinion largely overshadows the short term shut down.
I continue to believe that a short term target for CUS would be back in the $5.8 to $6.2 area, we could go back to this range in May should the company announce continued NATO progress in May and announce the signature of a 4th capacity contract.
Even if we were to have a dividend cut, I don’t expect a cut to exceed 30%, this could bring down the dividend to 40c a share, at $6 that would give us a 6.6% a yield, yet still higher than 4.5% yield for Superior Plus and 5.8% for Chemtrade, which potentially mean CUS may trade at $7 and still in line with peers with a yield of 5.7%.
A cut or not, Canexus is ultimately heading to the $6-$7 range, any reaction to a dividend cut will be short lived, the real prize remains NATO, and we only have another 4 months to go before this key asset turns from a cash black hole to a cash cow.
Regards,
Nawar
Comment by
whitey4$ on Apr 23, 2014 10:52am
Even though the dividend cut may be baked into the current SP I think the BOD is determined not to cut.I think the time to cut was last quarter CC when all the bad news was thrown out and there is no reason to cut now. Either way I will hold and enjoy the long term profits. Whitey