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Assuming EBITDA came in at around $175m for the last 12 months then this is trading on an EV/EBITDA of c4x (appx Mkt Cap $175m + Debt $550m). The lowish backward looking multiple is probably fair for the time being given the risk involved. If diamond prices hold and they can deliver say $175m free cashflow for debt reduction over the next 3 years then all that moves from the debt to the Mkt Cap i.e. it doubles the current figure - which points to the 32p that GS have attributed - with possible upside from (1) large finds and (b) a higher multiple for a de-risked financial profile. I am still realistically hoping for say 5 x $200m 18 months or so from now which would value the equity at say $500m i.e. around 45p per share (a figure I have posted before). GLA
I think many were sidelined ahead of results and now that these numbers are out, the main concerns relate to issues out of PDL's control such as China growth/demand and US growth/demand followed by Diamond prices.
They've forecast a 'flat' Diamond price arena for 2020 and I think most are expecting a little more weakness. I said a few days ago that a few more 100c size stones would do wonders and bring in some new buyers but after the initial 2 or 3 large stones in Q3, Q4 has been a little quiet.
There doesn't seem to be a good reason for the drop to all time lows but there's also not a huge pile of reasons for a return above 20p until they can deliver a couple of decent quarters through to Dec 19.
I think it's fair to say that the recovery and upside will come from 100ct stone finds and would be good if the company can 'message' these finds via RNS as they are worthy of headline news especially with SP at lows.
Whilst noting that we have established an all time low today (fractionally), given that the previous low was due to Blackrock sell-off, and most shorters cleared out within 24hrs of that final notification - gapping our SP up to 20+. It would seem safe to think that we won't see much more selling pressure from shorters at these all time historic lows. They may be willing to see where this heads for a bit before buying back their stock, but it's fair to think that we may be at the bottom now. Topped up another 4g at 16.8p which is my lowest purchase yet. Hadn't expected this to sink down to such a low as otherwise would of held off that other 10g purchase last week. All in hindsight, right
Fairly high-risk short term play, but have consistently commented that thought rise would be H2 post-FY results
JTS13, they are using a free cash flow for the firm (or equity) measure which is after interest and debt repayments. The RNS clearly states the bond coupon had been paid so you couldn’t mix up the fcf variables in the same report. You have to use one or the other, one being before interest repayments and the other after interest/debt servicing. Both account for capex expenditure, usually on a smoothing basis over the year. Ebitda is a clearer measure but fcf has been used to clearly evidence that pdl can pay down its debt. Trek
Strategy clear in terms of targeting larger diamond finds. This is inline with what we're wanting. Potential risk factor in that they're assuming price stability within market that is bearish. Defo recent mine closures elsewhere will help, but there is a lag there.
With regards to fcf, my interpretation was fcf AFTER debt and bond payments. Given that these are significant ($40m), it would therefore be equivalent of around $270-320m fcf. This is my interpretation based upon how fcf is worded elsewhere in RNSs... This being the case, then net debt reduction by 50% over 3 years is not bad. Esp when this be a fairly reserved target. If however my interpretation is wrong, and fcf is pre-debt/bond payments. Then this will sink further yet
Yes also trying to work out the $150-200m FCF comment. Should be higher with lower guidance CAPEX. Can only assume they’ve gone prudent in the hope they will outperform this. To be honest if they can deliver $200m FCF after debt repayments over next three years I will take that. As would reduce debt pile to about $350m.
Well you point are valid on timing. The question how far will sp fall. Duffy free cash flow project seems not online with expectation. From results FCF was 17mln, with approx 44 mln debts payment. So fcf is around 61 mln. Duffy project only quote 200 mln highest level over 3 year, 65+ mln per year. This is reflecting existing performance. So, nothing special with the 200 mln. 150 mln means it fall short. Debts can only be reduced by more 100+ carrot finding and capex reduction. Although capex in 2020 is about 35 mln in total, they should have much more cash flow. Something not write as some hidden cost resulting in debts just not really moving down below 500 mln. I hope the sp stabilised, but 12 to 15 p looks likely now. Good luck all. Wait for price rerate., long risky wait.
Hi lon, yes debt debt debt, but if you can time an entry into a recovery play that is managing debt such as pdl the returns can be amazing, it’s like a company suddenly getting a few hundred million from out of the blue.. This is a risk play on that and the grown ups here know how difficult it is to time ones entry which is why we have differing strategies including using CFDs to cover positions or averaging in and out. What is your position, one of hindsight which is usually the easiest. Trek.
They kept the 100ct find for today, I intimidated in an earlier post that they may have something up their sleeve. Not so much prescient just a guess based on lack of news for a while. I note the early muted response from the MM. I would expect us to tick up. I thought we’d see around 24p after numbers like this but it looks like more time is needed now after the recent lows. The house broker should get their finger out now with an updated sp target. Trek
Trek - that is my quick read also - i.e. steady; perhaps not great BUT no material downside suprises. Debt appears under control and should start to see some meaningful reductions unless market prices fall off a cliff. Did they also reveal a new 100ct+ find post 30 Jun or is this one that they had already announced?
yes agreed. 'Actuals' are lower but 'Capex' is better. So, by and large, a pretty workmanlike performance from Petra. Friday's 'sell-off' was always a strong guider as to what we were to expect this morning and -6% on Fridays is about right. Tough sector this one with no uplift in diamond prices in sight; this year at least, it seems. ATB
Quickly read through but broadly as guided, fcf up but looks to have come from capex savings, no surprises! Being critical project 2022 should have been bau and they need to focus on Finsch. Debt is being managed and it looks like we could be at an inflexion point, good to see the amended payment plan. Trek.