London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Hi Nonegspleeze & Ecosselibre,
As previously posted, I'm tied up elsewhere until at least midweek-ish next week.
On course for posting later next week, once back home (so hopefully will reply then :)
I would very much appreciate Velo's analyses taking into account the Q4 report.
Re the appointment MKANGO might be worth the watching !
10 days ago you were confident we'd close July higher than we opened.
Q4 report containing higher AISC with lower production has put paid to that.
How do you now see August playing out?
This means all the analysts know YTD Net Profit is $96.5m / 1.4 / 272m shares = 25.3p x p/e of 4 = 101.4p.
Cash of $101m / 1.4 /272 shares = 26.5p
Total Share Price = 127.9p
Not bad for my estimate of 128p ( one day before the results)
I presume the sales adjustment is based upon the change in price between the initial sale and the sale actually being completed. Q3 results suggest that the price received upon completion was higher than when submitted. The Q4 results suggest that the completion price was almost exactly the same as the initial sale price.
So, for example (numbers plucked out of thin air), going into Q3 the sales price was ~$20k and SLP actually received an extra $15 million when the sales completed due to the rising price ($27,400 by March).
Going into Q4, the sales price would have been adjusted upwards (e.g. now at $25k), but the price was falling and everything evened itself out ($28,700 falling to $21,700), which resulted in barely any adjustment being required.
At a guess, I would expect the initial sales price to be the average over the trailing x months.
-- If it is the previous six months, then the initial sales price in July would be $24,500 (based upon your numbers).
-- If the price is averaged over the previous 3 months, then the initial sales price would be $25,800
If the spot price is now under the initial sales price, then we may see the completion price adjusted downwards during the next quarter - i.e. the cash adjustment may go negative, with SLP having to 'pay back' money to the buyer. There may, however, be a safety buffer built into the initial sales price to avoid that situation - e.g. average of the previous six months minus 15%.
I expect the actual figures are considered to be commercially sensitive, so I doubt we'll ever know exactly how it works. Do you have any PGM data that can be used to correlate with the previous sales adjustments?
looking at the rh price over the last 2 quarters, and roughly looking at jmat i have, roughly rounded:
jan = 19,700
feb = 22,500
mar = 27,400
apr = 28,700
may = 27,200
june = 21,700
so........on face value (if they realised everything in the same month which they dont) we have quite a big lag effect on sales adjustment because q4 was higher per qtr average than q3, so we should see some of this trickle into next qtr (even though rh is lower for this next qtr) ??
or have i missed something
I think you may have twisted Quiggers' argument there. Would you be happy to sell him your shares for 1p, which is the implication of a 1p share price.
Yes. We should cheer if the market is irrational enough and offer us 100p for the price of 1p. I doubt we will be so lucky though.
However, this is only possible when the business is intact, has good future prospects and not an exhorbitanty high valuation.
SLP ticks all these boxes. In fact, it's difficult to see it going lower, but we've all been there over the years.
You can really only do this with top quality companies. And SLP is in that bag.
So yes, 1p for the share? Anyone care to sell it to me pls?
I'd be delighted.
glad you said that gotreal, i was going to but thought someone else might, and MM dont really short to a great extent, though can do similar sort of things over very short time frame
that upward trendline for us today is bloody straight, for those who like their more than 2 data point trends (chatmandu etc)
think your getting largely found out, feels like you are a recent graduate just guessing tbh
The thing was, his speech made perfect sense ;-)
I am not sure the market knows something we didn't. Be we now know that there is quite a bit of something that you don't know.
Almost makes me sound like the infamous Donald Rumsfeld in one of his hilarious speeches....
the great thing about slp is that whatever the knock back, it gets picked up by its loyal following, in fact as i think luna said, we almost welcome it
shorters on here will try and do this and that but not interested......
the extra costs i think are simply the slightly lower grade ore, so either more gets refined for the same output or the output is less therefore costs spread over a smaller base, so higher, is the way i read it.
all miners do this i think.
yes best leaveit chatmandu,
you can claim it was not meant to be taken on face value but well with all things shorters and on results day, no benefit of doubt given
No please Chatmandu leave it , don't try to be more specific.
We like predictions of loss making for a company that just made $95 million profit.
The issue here isn`t a down trend so ignore the -11m that`s bonkers; the issue is that in q1 and q2 net earnings were around 20m. they then doubled in the next quarter. I think it is fair to say expectations were (using an average) of around 30m so to come in less than half is a bit of a punch to the solar plexus.
To ignore that, to dismiss it, is to avoid the truth.
yes, long term, this will (or should) recover. But nobody in their right mind is saying today is a good day because of the way SLP present their numbers.
In a few weeks, we could have been talking about a 49% net profit margin for the year.
Instead we are looking at and talking about a 15% drop in the SP.
I was referring to my calculation being 'obviously very rough'. The two data points I was referring to were the net profit in Q3 and Q4.
USD Profit Q3 41,316 > USD Profit Q4 14,739 > USD Loss Q1 -11,838
41,316 - 14,739 = 26,577
14,739 - 26,577 = -11,838
It wasn't supposed to be an entirely serious comment to be taken at face value - more of an indication of a trend that, if continued, could have serious implications. Anybody with any level of statistical knowledge would know that projecting from two data points is essentially meaningless and I assumed that my 'projection' would be received on that basis, but the underlying point understood.
Sorry for any confusion. I'll try to be more specific in future.
The sales adjustment is made because SLP get paid 4 months after delivery by their customer. If the eventual sales price is higher than they budget over a period then they make a sales adjustment for ' actual realised prices '. Effectively their income is based on averages until this point.
So the lack of an adjustment AND an 11% lower basket price to me suggest prices were a lot softer than q3 which I certainly didn't predict - I had it down as similar or slightly worse not half.
why is it "obviously a very rough calculation" when its in a set of accounts, unlikely anything is rough in the accounting world unless its a goodwill writedown which is a bit subjective
normally a sales adjustment is for (in other industries) returned, defective goods, so cant be that so all i can think of is some kind of adjustment for delayed sales or delayed payment, but complete guess
Yeah Chatmandu not sure what you're getting at, noone is forecasting a complete collapse of basket prices.
I think it's reasonable to assume it will remain very profitable as a business but i still end up at or around today's valuation based on my post above.
It's by no means a terrible company, loss making or any of that rubbish.
But unless the profits go up from q4 x 4 i think there is an argument this looks fairly valued. 3 of the quarters this year have been very similar and very impressive, the annual figures year on year are great.
But once you do the conversions dollars into sterling after 27% income tax and a few other costs i think the share price might be about right.
It goes without saying i could be completely wrong mind you, who knows.
It's obviously a very rough calculation, based upon only two data points, so I'm not suggesting it is an accurate forecast - but a 67% reduction in profit is pretty dramatic given the current PGM prices. It doesn't look as though the company has much wriggle room to deal with external shocks.
loss making ?
interesting conclusion, but wrong. no wonder you get attacked on here
I'm looking at the Q4 results and they are a bit of a bloodbath.
There is an item that I don't understand:
-98% Sales adjustments.
What does that mean? -98% of anything seems bad.
It looks as though costs have shot up at the same time that total production and the basket price have reduced. This has resulted in a 64% USD profit reduction.
If those trends continue, how long until we're into loss making territory?
USD Profit Q3 41,316 > USD Profit Q4 14,739 > USD Loss Q1 -11,838 ?
Given the recent share price weakness, it does make me wonder if 'the market' knew something we didn't.
So now we know (more or less) the full year 20/21
net profit 68.25m
net profit margin 45% to 49% accounting for USD/GBP fluctuation.
Guvvi See post on ths at 7.54am by tones7777 outlines stats here v Ths stats on last quarter production and revenue. Slp is way behind ths but i think slp is also undervalued at this price and the drop is overdone so taken a few. Have much larger hold in ths and adding there too.
I'm going to be honest here and sell quite a bit. Having been following the pgm prices from many sources for the whole quarter im surprised the basket price is down 11%. Not quite so worried about the costs increases and the lower mining recovery %.
I got the cash in bank spot on but my earnings were miles out. On a cash adjusted p/e of 4 i now have a market cap of exactly 300M which is very close to where we are today. I've done a spreadsheet projecting q1/q2/q4 through for a year after tax and converting dollars into sterling etc and still end up in the same place. I'd expected earnings to be at least 50% higher than this really.
There was no sales adjustment ( despite my belief PGM prices were still pretty high for this quarter ) and the basket was lower. This suggests real prices are maybe lower than the charts that track the spot prices?
FYI my holding here is substantial and ive held it for a little over 2 years so i'm sad to be looking at the business like this - i hope i'm wrong on behalf of you all!!