LYC -4.49%: slipped to a 4-month low today before recovering somewhat, though it is still down 14% over the past 3 months. The recent weakness largely stems from Tesla (TLSA) announcing they were working on replacing the rare earth materials in their EVs to reduce costs. While they are committed to the comment, it was hard to pinpoint the technology required to replace the rare earth materials used within the engine. Additionally, EVs are just one application of Lynas’ products which are vital in a range of applications in clean energy generation & distribution, while Tesla is just one EV manufacturer. There is a very broad range of analyst price targets in the market for Lynas at the moment, ranging from a sell at $6.70 and the highest buy at $12.78. We think the sell-off has been overdone on fears the company’s Kalgoorlie plant ramp-up will take longer than expected with Lynas managing inventory well to limit any downside in the event there is a production gap come 1 July when their Malaysian licence conditions change.
MM is Bullish LYC, looking to add to our 4% weighting in the Emerging Companies Portfolio
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