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Really great to see almost 36m shares of that 40m not matched today.
Noted UBS did a 93m trade recently also, an exchange between a buyer and seller though which is why there was no positive movement. These very chunky sums that keep arriving on the bid show the intent, demand by one or maybe more parties. If not matched off then it's going to be significant and i'll share more on that
As with 1.60 levels the other day, someone is really trying to position themselves
What should also add a uptick in confidence is that the second largest bondholder has representation on the PDL board now. They have insight, they can influence. Again, they And other bondholders converted at 3.4p - a premium to the sp
If you think the analysts have got their forward multiples right then clearly a very big opportunity ahead from these levels. I've taken that bet and we'll find out how that plays out longer term, short term doesn't interest me. I've added a few more today on the weakness as targeting back to the bondholders 3.40p as the first target.
I much simpler way to look at this, but still arrive at the same conclusion, would be to assume that PDL does not make a net profit nor dividends payment until after FY2023... but they pay off their debts instead. In this case, for the enterprise value to stay the same, the equity value would need to increase by the current net debt of 290 M. In other words the combined share value would trible from the current 150 M...
To avoid misunderstandings, since I have used both "earnings" and "EBITDA" in my previous post: EBITDA is essentially net income (or earnings) - but with interest, taxes, depreciation, and amortization added back.
Therefore, what can be inferred from the context, but is not stated clearly, is "I expect EBITDA FY21 to be about 130 M USD".
Also, the PE ratio of the other companies cannot be directly compared to my calculation of Market Cap/EBITDA for PDL, but I have not made the similar ratios for the other companies. To make a fair comparison between tradional PE ratios and the PDL ratio for market cap/EBITDA, you might take half the PE values mentioned - or even better, use real data to calulate valid ratios for future enterprise value/EBITDA.
In any case, I would expect the benchmarks to support my hypothesis that PDL sp is ready to double in a years time, when compared to other mining companies.
This view also highlights that the main risk for PDL shareholders is if the company only manages to realise a reasonable part of sales as EBITDA, but does not manage to drive down its debt, interest payments and operational cost well enough to realise enough net positive earnings, thereby failing to justify a significantly higher market cap (=share price).
However, since the current market cap is based on the previous years' net negative earnings, it will not take much to reverse the picture...
So, assuming the number of shares stay constant for now at about 10 bn., obviously the sp will increase if the market cap goes up since market cap=#shares*sp. The ratio market cap/ebitda is illustrative of this relation.
MARKET CAP: Based on yesterdays closing price PDLs current market cap is 9,710,089,272*0,0143GBP= 138.854.277 GBP
EBITDA: We can have different expectations about FY21 EBITDA, but based on the latest sales update from PDL (Q3 2021) the nine months until 21 March 2021 hit a sales number 284 M USD, adding 106 M USD in Q3 alone, I would expect about 400 M USD for FY21. An EBITDA at about 30% of sales seems reasonable to me, but you might have a better idea here?, I would expect earning FY21 to be about 130 M USD.
PE ratio: about 1.
Looking at other mining companies their PE reatio is e.g.:
- As always, please do your own research for better comparisons if you do not think these companies are reasonable benchmarks... I would be only too happy to qualify this analysis further...
Thanks for input, makes sense
I don't think the number of shares is a biggy.
Much more important as yardstick is the market cap. If that goes up the value of shares would increase in accordance no? So, for example, if the market cap doubled then share price would double irrespective of whether they were 1 million or 1 billion.
And there's always option for consolidation down the line.
I think what the number of shares usually tells me is something about management and dilution.
As the share dilution was ten times approx, does that mean in theory for the s onto increase, it would need ten times the demand? Ie to inc the same level, if so, that will be hugely difficult, and if performance is not much better, then s p will get worse, the bond holders who now have shares , all those need to be bought to make a huge s p rise, or at least significant demand, I can’t see it, but may well be wrong !
Fire ant, all comments noted and make sense, also are you aware of the difference between the 2 different versions of eps in the last results? If anyone cares to explain, please do. It seems to say they believe the lower one is more accurate but that is quite low,
Totally agree but 3.4 short term after that is wherein gets interesting
Bobbyreg: I am not of the opinion that the sp will return to existing levels, because the sp did not drop much after the MASSIVE dilution. But, I personally see upside of 100+% and a reasonably attractive risk/reward at these levels.
Existing shareholders were destroyed and now own next to nothing, but I suspect the bond holders will want to see some of their money back and for that reason, I see some support of the sp.
On the other hand, the sp could become very volatile as it would effectively have a tiny free float. Nobody knows yet...
In my view, it's definitely been de-risked to some extent and with the diamond market coming alive (just look at Gem Diamonds) I can see some value in a punt here. Clearly it's high risk, but I would have thought that's blindingly obvious...
(Just my personal opinion. I might be wrong)
Any future dividend would not be high measured per share, but then again the sp is also low.
I assume value is gained at first through higher sp value as and when the pdl benchmark values rebalance to normal levels ie p/e, leverance, ev/ebitda etc. Within the next two years maybe.
After that, we might see a dividend like the one you mention of 10 mio. This would seem reasonable at 5-10% if ebitda at 100-200 mio.
Notice also that such a dividend of 10 mio would equal 7-8% of the total equity value, which would be abnormally high. This also illustrates that the sp is more likely than not to increase well before then...
Yes, your answer is persuasive or reply. Yes, if they make that profit, which is similar to the current market cap, the the current s p is very approx a p e of 1, so, yes a multi bagger could be in play. But looking at their previous profits , I cannot see that much profit being made, the again, if the bond holders are motivated to recover it, ie the profit, and maybe even plan to sell it, the yes game on. My calculation, a 10ml dividend would be approx one tenth of a pence. Any thoughts ?
it is fair enough to challenge the positive assumptions so we do not get overly complacent in here... Here are my five cents of opinion, for what it is worth.
Obviously, we will have to wait and see what the numbers are before we get the answers we seek. But the specific concern you mention that even a successful turn-around to becoming a profitable company with a reasonable debt level would still not be enough to raise the share prise significantly due to dilution seems unreasonably pessimistic to me.
First, it looks like we agree that the diamond industry is not in terminal decline. Most signs even point in the direction of it moving towards a growth period. This presents an opportunity of revenue growth for PDL.
Regarding PDL, and your question about what happens if they recover... the major drag has been the huge debt pile for years. But current net debt is now reduced to 290 M$, after the 1-9 dilution of # shares there are about 10 bn shares. In the coming years nobody knows the numbers yet (obviously), but a reasonable guess for FY23 would be expected EBITDA about 150-200 M$, positive net income and an even greater reduction in net debt towards 0.5-1% leverage.
Since the bondholders are now also major shareholders (91%) it is reasonable to assume that such company would start growing its sp significantly and with a high free cashflow might even start paying dividends if capex and acquisitions do not need to get prioritised too much by the new management. The previous ceo is out, and the current one has stated from the beginning, and repeated several times hat PDLs first priority is to get the debt reigned in, before they state new strategic targets. So far, they have actually delivered on that promise!
If it was a terminal structural decline, gem diamonds competitors would not be profiting and paying dividends. Add to which the better businesses can make money in downtimes. It’s possibly a bit of both, it ok, can they recover ...the problem is if they do and even make a profit and get the debt under control, the share is so diluted it is makes a profit, unlikey to effect s p....there are over 800bn, if I am not mistaken ,
On the way try to come with logic but nothing viable l invest or don't do your own research
PDLs problems originate from paying excessively and loading the company with huge debt for an underperforming asset right at the top of the diamond market as it entered a cyclical downturn.Market sentiment plummeted compounded by the bondholders shorting equity to reduce risk to their bonds.The coup de grace was the corona virus.
Subsequent to the bondholder deal which has practically halved the debt I believe that PDL is in a better position than it was a year ago .At current share price its hard to see bondhoders shorting it as they now have a considerable stake in equity doing well.
The issue is exactly the diamond industry,has it been in a cyclical downturn or a terminal structural decline.If the former PDL will do well at current share price,if its the latter then PDL is not an investment to pursue.
Thats the bet.
Ah, apologies if I caused offence, may I ask what you value his business at ? And how you calculate it?
The company share price has gone from over 180 to 1.5 in 6 years, 2 Dilutions, almost no dividends, and people think it is investable ?
The management have in my view zero interest in returning anything to people who purchase this stock, only a fool would buy, it is speculation that someone else will pay more, and in the absence of any dividend or meaningful profit, in relation to the share price, it would be silly to pay above 1p, better less than .5.
The issue is not so much with the diamond industry as it is with the management of the company, there are other public companies in the industry that are much better investments like Gem Diamonds, Alrosa,
Looking cheap, it is cheap the debtors own majority of the company if it goes bust then what Benefits do they get none also alot of Auto trades coming in to keep it at low levels I can see it if you know what to look for once confidence is back the buying power will come into play
There's Bobbyreg again with his weekly deramp post...
regular as clockwork...
Quite laughable actually...
This would be ok value at .5 p. Don’t be fooled by it looking cheap, poorly run company