Credit Suisse doesn't pick on Felix

FELIX Resources, regularly bullied by media speculation of an impending takeover by Chinese giant Yanzhou Coal, is reportedly more likely to dismiss bids according to Credit Suisse, which has set a $A20 target price for shares in the mid-tier producer.
Credit Suisse doesn't pick on Felix Credit Suisse doesn't pick on Felix Credit Suisse doesn't pick on Felix Credit Suisse doesn't pick on Felix Credit Suisse doesn't pick on Felix


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While Felix has said discussions were continuing on “a potential change of control transaction”, on Monday the company also dismissed an “incorrect and purely speculative”Australian Financial Review newspaper report claiming it had set a two-week deadline to resolve takeover discussions.

Concerning a widely suggested $13.50 share price takeover by Yanzhou, Dow Jones Newswires has reported Credit Suisse as saying Felix management would rather de-risk its upcoming Moolarben thermal coal mine and see the share price re-rate, than sell the company cheaply.

Reportedly the major Swiss bank said Felix was fully funded and not a distressed seller and added an inexpensive $13.50 per share bid would be a true test of management belief in Moolarben.

Despite seeing a good possibility of no bid eventuating for Felix, Credit Suisse reportedly set an outperform recommendation on the company with a $20 target price, although the bank acknowledges a consequential short-term downside risk and went further saying it would view share price weakness as a buying opportunity.

Moolarben construction has started and Felix expects mining to start up in the second half of this year, while the first shipment from the new Newcastle Coal Infrastructure Group terminal remains on schedule to take place before March 2010.

Felix said in its recent quarterly report that Moolarben had already secured 2.8 million tonnes per annum of sales contracts and thermal coal demand, especially in Asia.

Shares in Felix last traded at $8.04, up 2c this morning.

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