What appears to be on the back of an export contract announcement yesterday, shares were up over 8%...but, this makes up only a small piece of the drop of near 40% from recent highs, and don’t look further back to 2019.

A couple of week ago the company announced a “Board Renewal and Strategic Review” both those themes worry me. especially as this is on the back of a new CEO, although not as much as the H1/22 update. The update in their own words had a lot of red ink on the page.

Are things broken, and if so, are they repairable? 

Trading was down in H1 with lower Chinese demand on the back of mill closures following power interruptions.

The second half seems to be a better proposition with around 90% of volume committed, and prices of export chips stabilising. Likely the market is expecting the same with the bounce from the export announcement. 

The company is in the process of offloading assets which the funds used to repay debt as well as buy back trees and fund expansion. 

I’m not convinced the strategy of increasing of increasing current capacity (by selling land assets) is going to generate returns when they are not making money at current capacity and have not done so for the last couple of years. 

Q&A following the results presentation revealed much more than the update itself. They are in a prime position with the location of operations and assets are in place to capitalise on the market, but much of the market opportunity is based on, and I hate to say it, hope rather than how. 

They also admitted there are remaining issues with staffing.

It is clear the management team and board have a lot on their plate, with the largest being a return to profitability and second being the debt pile.

This looks like a possible takeover with the shares trading at 30 something below net asset value.

So I have I come to the conclusion if its repairable or not? I think it is, but there are so many variables that the outcome may be a coin flip.