Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Sirius, that’s quite good work my friend. That last line valuation of yours is really rather similar to one of my higher end valuations (using a variety of metrics) I hinted at earlier in the day of £2.38.
Whats 20p between mates :)
Growth rate: next 5 years (-2.29% p.a) | Growth rate: 5 to 10 yrs (-5% pa) | Terminal Multiple: 8
MCap: $522,140,478
USD Ms
20/21 21/22 22/23 23/24 24/25 25/26 26/27 27/28 28/29 29/30 30/31 31/32
111.5 108.95 106.45 104.01 101.63 99.30 94.34 89.62 85.14 80.88 76.84 647.07
PV(20%) 90.79 73.92 60.19 49.01 39.91 31.59 25.01 19.80 15.68 12.41 104.51
=NPV Value: 522.83
So with a hefty 20% discount rate on a very pessimistic negative growth of - 2.29% each year for the next 5 years and then -5% for the following 5 with a terminal multiple of only 8, we end up with a net present value of 522.83m = today`s market cap.
STs 200p target price (with the same 20% discount rate) implies e.g. a years 1 to 5 growth of 4.7% p.a. with the next 5 years at 2.5%
Having said that, SLP have no debt (so there is no cost of debt) and 20% cost of equity looks to me very high given the very low risk free rate for USD and even allowing for South Africa country risk. If the discount rate is lowered to (say) 15% the Share Price is valued at 259p
S
Hahaha. Dubai the Wild West bruv. You don’t even have to hide behind curtains anymore while yammin during the holy month of Ramadan:)
bloody hell stoodio steady on.
are you sure its to type this stuff from dubai ? thought they sensored it ?
Basically, we all have an erect ligament at the prospects of STILL being materially undervalued. Let's go :)
Apologies if there any w e t women invested here too. Man why do I always have to lower the tone.
The market cap is $522,140,478.
Using the last 3 quarters earnings and averaging the 4th (conservative as we know) with a 20% discount rate (very high) the market is valuing SLP at negative - 2.29% growth for the next 5 years, and then negative -5% for the next 5 with a terminal multiple of 8. Lower the discount rate to 10% and on the same negative growth numbers, the market cap reads $ $848.6m.
And this in the context of PGMs, Rh, autos, China, hydrogen, etc etc. I don`t need to repeat, we all know it.
Unreal!!
S
This security is ridiculously neglected. I noticed it would qualify for Benjamin Graham's deep value criteria.
Forward PE of 2.5, PEG 0.1 and a whooping 50%+ growth.
Crazy
Swimming in it :)
" The other issue here you should always look at a companies EV ( enterprise value ) which in SLPs case is much lower than the market cap "
—----------
Yes, that's because there's no debt; so no surprise.
EV will always greater than MCap when a company has substantial debt.
It's the opposite here - SLP is in surplus :)
The other issue here you should always look at a companies EV ( enterprise value ) which in SLPs case is much lower than the market cap.
It gets paid 4 months behind its sales so in reality its huge 100m dollars odd cash pile is shooting up after the last quarter right now ( where you had a massive profit ) and by the looks of the current PGM prices and the increase production expected in the current quarter the profit is going to be even higher again.
I don't think people fully appreciate how much money we can be sure it is making right now and equally how cheap it's share price is relative to all this.
Simple p/e's or screens just won't highlight this. What surprises me is this is not now a small miner, its a £350m market cap company that is totally priced incorrectly. Long may it continue - well not for too long. :)
"Maybe they all pile in at the peak?"
---------
But what is the peak?
Imagine these earnings beats keep on indefinitely for some years yet. Imagine by then, the PE is bang in line with the industry average. Would that be the peak?
Because if earnings kept increasing as they have been to date, then a full year's earnings from that point on, would reduce the PE back to undervalued, so the SP would continue rinse and repeating to increase the SP just to keep in line. Perhaps more modestly but increase it would, otherwise the PE would start falling back into being undervalued.
So is a rating to merely average, the peak?
Of course as the years go by the company comes up against this end of life thingy which hasn't been discussed much on here, but I'm going with circa 2030 as a guesstimate unless others have an informed opinion as I'm not a natural rare earth metals investor.
Indeed Velo....
Maybe they all pile in at the peak? Would not be the first time this happened.
That's when jumping off the wagon might be a consideration... or not. Depends on the BOD's vision going forward.
Velo my brother:
"All it confirms is that out of all those highlighted, SLP has the potential to increase by the larger % in its SP than any of the others in the race to be viewed as merely average in comparison to the industry averages."
Is what I've been saying for years. SLP has the innate ability more than all industry peers to shapeshift, harder, faster and further at ultra short notice. The caveat I should add for transparency, is this can happen in either direction, however, for the foreseeable, it's not an unnatural assumption to assume this is going to be in the upwardly direction.
Here's what's making me laugh? Current SP? $1.38? Add a quid onto that for a nice £2.38 pps, I'd be thinking, "bout right".
:)
All it confirms is that out of all those highlighted, SLP has the potential to increase by the larger % in its SP than any of the others in the race to be viewed as merely average in comparison to the industry averages.
For the others to increase similarly to SLP they would have to be rated above the industry average and given a premium market rating, as currently they are all undervalued in comparison to the industry average.
All of them are having a tough job getting appreciated by the market as worthy of an industry average rating. They're all undervalued. A premium rating is out of reach for the foreseeable by all of them. So the race is to the industry average as a first step. There, some or all, may remain if ever that is granted by the market.
SLP keeps on producing commendable earnings as do most of the others. There is no sign any are being re-rated to premium status - ergo: the race is one of attempting be be rated merely in line with the industry average - and in that respect presupposing that day ever comes, SLP would have the greater %gain from this point just to achieve that.
The others would achieve not quite so high a % gain from this point, to arrive at the same destination, as they are closer to it.
Repeat: For the others to maintain a greater PE ratio than SLP, the market would have to rerate them as a premium stock. None are rated at that level yet, as the PE's show.
The %growth capability in SLP's SP will be amply demonstrated by end of August/early Sept.
Run this test again at the end of August :)
12m Forecast Rolling from Sockp.....
SLP 3.5
THS 4.3
JLP 5.6
FXPO 4.1
BRWM 5.2
AAL 7.9
CAML 9.0
"We have standardised certain Ratios for comparison purposes. In the case of the PE ratio, what we have done is create a rolling 1 year forecast earnings number which weights this year and next year's earnings forecasts depending on how far a company is through in its fiscal year. This puts every single company in the market on a comparable footing, allowing a like for like comparison across forecast valuation, growth and dividend variables. This is known as the 'rolling PE ratio'."