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itsa: actually, I do not think 113 is a significant barrier. We might move past it already next week. However, I think that you will be surprised at how high the SP will go before end of september...
In awe of such prescient commentary. How can you spare the time to post such insightful commentary?
112p to 104p finish impressive even by Petra's standards!!
! 113p will be a hard nut to crack .
Nice rise on low volume !! Maybe a nice big 50m quid rock has been found hopefully.
So far, so good. But if we now follow the same pattern like the run from December to April six months ago, I expect the SP to hit 190 in October, before we go back a few steps to test the low... But the september earnings call will be a significant event, which might "disturb" the geometric pattern of my technical analysis. Hold and see ;-)
Here we go ! ,-)
@Splendor: Good, balanced analysis of the pros/cons.
So, where are we on the PDL share price? In spite of my expectations, we actually got to test the 85 level... However, we did not break the support line at 80, so I did not go all in with a new mortgage etc ,-) But maybe I should have anyway... at least I will hold a significant position. Here is why:
From a technical perspective?: We have thoroughly tested the channel low at 85, we are currently flagging in a rising channel, and if (when,-) we break the 105 level in the next couple of weeks, we should be free to go to new all time high – so my goal is still intact at +150p before 2023…
Revenue and earnings?: I assume PDL is net cash by now, with two months of income since status of net debt at USD40M in June. Free cashflow for the year should also be high following the record revenue in FY22, and my guess is about USD 200M, to be confirmed when we get the results for FY22 next month.
Future development?:
1) as always diamond price levels could fall (they already are). However, in light of the Alrosa situation, global supply reductions and the rising demand, I assume they will stay at relatively high level, but find it prudent to allow for a -10% from the current record levels. This would impact revenue 1:1… so, from a FY22 baseline of USD580m that would reduce cashflow from 200 to 140.
2) Also, the increased capex from 80 in FY22 to 160 FY23 will reduce the free cashflow. Not so much a risk, since it has already been decided and announced, but a factor for evaluating the total future cashflow situation nonetheless. From 140 to 60.
3) Reduced value from exceptional finds ( >USD 5 M). Average is around USD45M, so it would be unreasonable to expect a repeat of the past record year (FY22) of USD89M this year (FY23). A fair guess would be a 50% reduction to around average of USD45M. Naturally, this will also reduce cashflow. From 60 to 15...
With such a drastically reduced future free cashflow, what about the debt?! Well, I hope the BOD will decide to repay all of the current debt in March 2023 from the current cash pile, when there is no longer any restrictions in terms of 3-4% extra fee on early repayments. This would bring the cashflow back online by removing the annual interest payments of about USD 50M. If only repaid partially, then refinance the rest from a position of strength, and start a significant share buy-back program or pay some dividends…
Altogether, I would not be surprised if free cashflow is reduced from the current level of around USD200M to just about USD 20M during the coming financial year (FY23). But since the capex investments have a positive business case, and PDL is a net cash company able to finance its own capex projects, the sp should be ok.
So, a hopeful (biased) prognosis for the coming 12 months: we go from the current level to +150 in the coming 2-5 months, then in 2H a small correction to account for the reduced cashflow and backtest the channel low at say 140… and then repeat the cycle ,-)
Hello 80s
7 constant red days will it be 8 tomorrow I wouldn't bet against it !!
Goes to 99p then drops of a cliff in a few minutes for some reason.
The daily volume is shocking so it's easy for the MMs to manipulate it either way.
We need some serious interest In this share otherwise its going to drift to new all time lows.
Updates only get sold into so best wait till after then .
Shares in Petra Diamonds (LON:PDL) are currently trading at 93.5p, but a key question for investors is how much the current economic uncertainty will affect the price.
One way of making that assessment is to look at the profile of the stock to see where its strengths are. The encouraging news is that Petra Diamonds has at least some of the traits that are often associated with two influential drivers of investment returns: high quality and a relatively cheap valuation.
To understand where they show up, here's a closer look:
GET MORE DATA-DRIVEN INSIGHTS INTO LON:PDL »
Quality at a reasonable price
Good quality stocks are loved by the market because they're more likely to be solid, dependable businesses. Profitability is important, but so is the firm's financial strength. A track record of improving finances is essential.
One of the quality metrics for Petra Diamonds is that it passes 8 of the 9 financial tests in the Piotroski F-Score. The F-Score is a world-class accounting-based checklist for finding stocks with an improving financial health trend. A good F-Score suggests that the company has strong signs of quality.
While quality is important, no-one wants to overpay for a stock, so an appealing valuation is vital too. With a weaker economy, earnings forecasts are unclear right across the market. But there are some valuation measures that can help, and one of them is the Earnings Yield.
Earnings Yield compares a company's profit with its market valuation (worked out by dividing its operating profit by its enterprise value). It gives you a total value of the stock (including its cash and debt), which makes it easier to compare different stocks. As a percentage, the higher the Earnings Yield, the better value the share.
A rule of thumb for a reasonable Earnings Yield might be 5%, and the Earnings Yield for Petra Diamonds is currently 78.0%.
In summary, good quality and relatively cheap valuations are pointers to those stocks that are some of the most appealing to contrarian value investors. It's among these shares that genuine mis-pricing can be found. Once the market recognises that these quality firms are on sale, those prices often rebound.
Related Article in todays Daily Mail….
https://www.thisismoney.co.uk/money/investing/article-10934605/SMALL-CAP-IDEAS-Pent-demand-diamonds-boost-small-miners.html
Itsa: yep, there is a descending triangle pushing towards 85. I still do not think we will get that far. However, if we actually go all the way down to 80p, I will be ready to buy a serious extra amount ,-)
Splendor it looks like you are remortgaging your house !!
Hi Itsa, good luck ;-) If we get to revisit that level, I will even mortgage my house and invest for borrowed funds... But in three weeks - after the FY22 sales report - we might also be much higher than now.
My 80p entry is looking promising here ??
Yes, I can't be a winner, baby
Because I was born to lose
I go to bed every night
With troubles, baby
Because I wake up
Thinking about you
I'm tired of you
Putting me down, baby
I think I'm gonna do like a mole
And move underground
Third section of B.B. King "Go Underground"
What's happened to MrCarats?
Do we need to send out a search party?
The number of posts has dropped dramatically!
https://www.mining.com/de-beers-rises-small-diamonds-price-amid-shortage/