Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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I'm a buyer ;)
Temporarily off its highs, yet still absolutely bringing home the cheese :)
The sell down from Africa Asia has been bought into quite heavily. Expected pull back off the £1.32 high of this / last week and hopefully some decent consolidation no lower then the £1.25 mark before the next huge step up which i'm expecting to take us into the high £1.30s, low £1.40 within the next 4 weeks :)
Nothing to see here. Smoke weed and eat pancakes.
:)
Thanks - interesting. From what I read in MI, they have the rights to current and historic tailings dumps of the 6 sites, and the Momentum Investor piece states these locations have a remaining life of 7-10 years. You are correct that Semancor is a major operator with numerous other sites, but there is indeed no visibility of future additional contracts. Ultimately, if they cant obtain new sources, then this is a run off play of these locations, which would explain a relatively low apparent multiple (though a large part of the multiple being so low are the eye watering price levels their PGM content has reached - if these arent maintained and there is a reversion to pre 2020 price levels, then the multiples wont look so low) . They have indeed upgraded their recovery tech, reducing talings volume used by 20-30% on half their sites, so that helps but ultimately means there is a finite volume of tailings to be processed.
Hi JonnyGee. Not sure where that info came from but the 7-10 years life relates to the tailings dumps which SLP has the rights to, not the Samancor mines. The mines themselves have pretty extended life, the seam is huge, but given its Samancor we don't have clarity on their future intentions. Therein lies the risk. The dumps run out and then SLP has to rely on current arisings. But Samancor is one of the largest suppliers of seaborne chrome and ferrochrome. There's no way they wont be mining chrome in 10 years.
The dumps make up a large portion of the material processed. I cant remember how much but its more than 50%. So after the dumps run out SLP could be looking at significantly reduced production. Then again, in 7 years time there might be an Echo 2 or3 meaning that those dumps can be economically processed again and again. I think in the most recent presentation they mentioned that they may have found a way to extend the dumps' life already. Given advances in tech and the impact on recovery the life of the dumps could indeed extend beyond the finite stated life
I have "Security Analysis" on my bed-side table (one day I might finish it)! which page(s) is this set out?
Not sure that is what these legends of value investing thought. The point is simply surely that you cannot take a risk-free rate derived from a long term (say 10 yr) sovereign bond and use that to value equities. The two are completely chalk and cheese. Equities (obviously) carry much, much more risk than bonds. The risk free rate (sovereign bonds) is added to the Equity Risk Premium (depending upon the risk profile - Venezuelan IT start ups = 25%, FTSE blue chip = 6%) to give a cost of equity.
If there is debt, you bring in the cost of debt and put the two together to form the cost of capital which is your discount rate back to NPV
One can also use a price multiple.
But I don`t know of any method which uses a risk free rate to value equities without adding in some form of ERP.
Anyway, what works for you works... so that is all that matters!
S
Thanks for the tips. Price of course spiked on Monday before I could sort this out but hopefully there will be a few bumps down like today. I do however have another more fundamental question on SLP which you guys who are obviously tracking it more may be able to answer. I came across them reading The Momentum Investor coverage which was positive plus the IC piece. One thing that does concern me though is the very finite tailings supply they have with the 6 Semancor sites only having a remaining profitable life of 7-10 years . No visibility on additional site agreements with Semancor and with the metal prices going where they are there is a significant risk of miners keeping this to themselves. Any of you guys have some gen new supply sources - comments from the company on this?
Hi Sirius
I am not using a DCF for my personal investment decisions. The method I employed (for decades) is from Benjamin Graham (and David Dodd).
Graham thought that since the investor had the choice between purchasing common stocks or bonds, it was appropriate to take into account the rate of interest paid on a high-grade bond - 4.6% in this case- in determining the intrinsic value of a stock.
That's where the 4.6% come from.
Great rise today and special thanks to Klaus Schwab without whose meddling this wouldn't be happening.
2021 will be the year when every major government, as well as broad private-sector coalitions, commit to a “net-zero” target for greenhouse-gas (GHG) emissions. This means that, rather being stuck in a race to the bottom and fearing a continuous “free-rider” problem, the world can benefit from a virtuous cycle of decarbonization.
With the added knock on effect to catalytic converters and emission controls which we here are thankful for.
Afterburners been lit :)
Bazzaman's comment about the delay is I believe behind today's sudden interest and with results due in 6-7 weeks hopefully this is the beginning of the march to 150+
I was hoping for a crash, not for a sudden appreciation... darn.
131?
" I'm enjoying the slow appreciation journey.."
Slow???
- Spoke too soon?
LN:
You seem to be discounting eps at the risk free rate of 4.6%? Is that your cost of capital?
What Equity Risk Premium are you using, given this is: (1) mining; and (2) South Africa?
Others on here use a discount rate nearer to 20% IIRC
Fair value at c. 3% growth from year 3 (15%, 10% years 1 and 2) = low to mid 200s on those inputs. I see she has broken the upside of that rising wedge: https://www.tradingview.com/x/g9klEvEr/
Happy days :)
S
Hi Velo,
I don't use a DCF approach either. It's Graham and Dodd's formula (which I made a bit more pessimistic even). Very simple and a litmus test that served me well for decades... Ironically, a lot of DCF calculations often arrive in similar ballparks.
I do like the P/E comparision with industry averages. Also, nice and simple and ought to be totally sufficient for our puproses.
I'll give that a go as well :) Cheers!
I dislike using the discounted cashflow version of calculating SP's because of estimating future interest rates et al, but do enjoy seeing others valuations of SLP. For instance Simply Wall Street site's discounted cashflow value is coming up with the 470's for SLP.
My very simple PE ratio comparison of industry averages v SLP comes out higher in the 270's as it's true value right now without a premium rating added for future growth.
And Stoodio has posted he's working on a bunch of valuations, but whoever, whatever, it's all coming out at much of a muchness whatever calc is used
- as the consensus is that the current market SP valuation currently under-estimates SLP's 'fair' value.
I'm enjoying the slow appreciation journey towards true and fair value.
This is one of the shares whose valuation I had to artificially throttle because I could not believe the results.
In those cases, I am using a growth rate equal to the growth of inflation over the last 30 years, which is 2.9%
Needless to say that the resulting figure still comes out way higher than what it currently is.
In case you are interested, using the TTM Eps of 23.10, a growth rate of a meager 2.9% and a 20Yr Bond rate of 4.60%, the resulting fair value is at 218.75 and a buy with a 50% Margin of Saftey at 109.37.
But that's just to ensure capital is safeguarded from inflation.
But what to estimate as growth value. If I use a CAGR of 98% over the last 5-6 years, it will be insanely high, and not sustainable. Let's use the CAGR in ROE of 12.7%, this gives a fair value of 435.28 with a buy under 217.64% using Graham and Dodd's litmus test (sufficient for my purposes).
Please do sell your positions in SLP since I have no clue what I am talking about! You will find a grateful buyer in me :P
N
She just keeps on giving. The funny thing is, we are still far from being fair value :)
Balls in hand as we speak Velo :)
Mind you since late last summer, new ATH's have been created every single month onwards. Watch you don't get scalded when you're pressing keys on your keyboard when on the SLP page, because this stock is H-h-h-h -O-T!
. . . New all time (intraday) high achieved this morning
- as previous ATH was 127 (last month).
Hargreaves Lansdown no probs.
But this share I will not be trading I will be holding.
ATB
And of course the ubiquitous IG.
But if you're at the stage of struggling to find a broker that offers SLP then IG is far too dangerous to consider because of the "attractions" they offer just a click away.
Yes HL,
AJ Bell
and cheapo fees platform, iWeb
all offer SLP no problemo.
JohnnyGee
You could try iWeb (Lloyd's), for an execution only service.
You can tell em' I said it :)