Broker: Singer
Company: ZincOx Resources
Share price: 54p
Target price: 128p
Recommendation: Buy
ZincOx Resources has been highlighted as one of Singer's Best Ideas for 2012. The company is currently constructing its first zinc reprocessing plant in South Korea.
Bull points include the commissioning of the Korean plant in the first quarter of 2012, which will enable ZincOx to dominate the Korean market for the reprocessing of electric arc furnace dust. A second phase of the Korean plant will be built. ZincOx will also be well placed to dominate the market in the rest of the world.
A technology risk is associated with the new plant, and there will initially be a lower margin on production. ZincOx has agreements in Korea that limit the downside if zinc prices fall.
ZincOx should break even in 2012 and is expected to make a profit of £7.9 million in 2013. A sum of the parts estimate produces a value of 128p a share, with most of that value accounted for by the first phase of the Korean plant.
