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No report ever mentioned appetite for growth by aquisition. It is indeed a terrible strategy in pinciple.
However, there are projects in the pipeline---mentioned. So it might we worth a bit of input about the boards strategic view. Another question would be how much more can the current process be optimised? Or are we looking at providing better feed quality by 'our own diggings'?
Reasonable questions, I would think. There are a lot of mentions but a bit of a clearer statement at some stage wouldn't hurt.
Velo - Well done on the basket price driven forecast, but its also about quantities and to finish the story you should look at 4E or 6E quarterly quantities over the same period. I quickly totted up the 6E quantities per quarter taking an average for each year missing out the lockdown quarter Q4 2020.
2019 24.28K OZs 2020 26.53K OZs 2021 23.5K OZs 2022 20.6k OZs
So far this year its down by 15% but if you look at the last 5 quarters 24.3k 24.9k 23.6k 21.2k 20.4k its a pattern that has to be halted especially as the 2nd quarter basket price is somewhere around $2400 and although its a healthy profit it doesn't look good for visionary's. Bearing in mind 47% of unsettled sales for the 1st quarter were based on an average basket price of $2897 so will have to be adjusted to the current level of approx $2400.
The 2nd Quarter will give a guide to quantities if the operation at Lesedi has been ramped up but it won't be before Q3 before it can be fully analysed.
There is so much to look forward to next year but at the moment the sp is pegged.
Having been burned by RPC's expansion/acquisition spree (although I still finished 'up' by a considerable amount), I'm not interested in expansion unless there is a solid business case.
Thanks for running the numbers and providing your input. It's food for thought and does at least provide an explanation for the share price weakness - it could be completely unrelated to your theory, of course, but who knows how others are calculating fair value?
I think we need to approach this from another angle - i.e. it doesn't matter what we calculate to be the fair value of the company. Our holdings are ultimately valued by others ('the market'), so if they value it at 85p, then it's only worth 85p because you're not going to sell it anywhere else The market's price may change in our favour (I continue to hold), but the price might remain 'unfair', from our perspective, indefinitely.
This is an AIM share in a reflectively small company. How much time do you think analysts are wasting on it? They'll do a quick calculation, apply a discount for South Africa, apply another discount for Omicron and move onto the next company. You don't get to be a market maker by taking risks and offering optimistic prices to small investors.
Value trap would be a bit of an exaggeration.
What raise my eyebrows was that guidance for this FY is flat (ie same as last year), alas at less enthusiastic---but still very good-- basket prices. That there is a decrease in enthusiasm is understandable.
My question is? What are the future plans? I am not advocating growth at all costs, but is this it? There are projects in the pipeline but it would be useful to hear a little bit more about where the board wants to steer the company going forward.
Cheers Velo, brillant and informative posts as always, it's appreciated.
I did initially say I wanted to include the SP for consideration in this recent run of posts.
I regard SP's as pure sentiment driven, and as much as these recent posts have been mostly of a bullish nature the current SP performance leaves me somewhat adrift.
And although I've received confirmation from at least one other poster that they also see higher lows and higher highs in these current peaks and troughs, that formed as far back as August, on closer examination I am being met with increasing concerns as regards that formation.
It's possible that things change in the coming days/weeks, but would need to see a bullish breakout from here, pronto. Not a breakout to a full recovery yet, but simply a move away from this current floor.
(Part 2 Concludes )
. . . As this year ending June 2022 is forecast to be worse than last year, I've deliberately omitted to show 2021's fantastic performance and directly place the analysts forecasts as if it was the next year in line above to see how bad it looks by comparison, because it's going to be a stinker, right?
We know it's going to be poor when compared to last year so will look pretty tame next to the last in line of the years above, yes?
Well here it is placed in line with the last couple of years and see how it stacks up, should SLP come in, in line with market guidance -
. . . $m 2019 . . 2020 . . (2022 analyst forecasts)
Revenue = 70.5 . . .115.0 . . .192.0
Net Profit=18.2 . . . 41.0 . . . . .75.0
Some poor performance when the market expectations, if achieved by SLP, are on their way to almost double that of year ending 2020!
Before you think that's too optimistic for 2022, now look at the results with 2021 inserted and -
. . . $m 2020 . . . 2021 . . (2022 analyst forecasts)
Revenue = 115.0 . .206.0. . . .192.0
Net Profit= . 41.0 . . .99.8 . . . . 75.0
Put in perspective, it shows even at these reduced PGM prices SLP will still remain a healthy business throughout this chip crisis.
Revenue hardly impacted at all. But Net Profit decimated in comparison to last year's only.
For 2023 the analysts have SLP increasing revenue slightly to $207m
- but show Net Profit still under pressure with a further reduction, but only a slight drop of $3m to $72m
All-in-all, it puts future performance in a reasonable perspective, showing SLP producing healthy returns at these PGM price levels.
- but first up will be the immenent H1 results and how that impacts events.
Part two follows after this, and then I'm done)
Will now finish off this run of posts with a peek at some financials but before that, a summary of the metals lest urban mythology cement misplaced opinions:
Prices of PGM's have been dropping semingly non-stop ever since this summer, yes true.
- but surprisingly, despite that, lower as they are currently this year, prices are still HIGHER than all those achieved in the first H1 half year, for last year!
H2 for this trading year however (next Jan to June) is where last year's prices are far, far, higher than this year's expected H2, and will impact the full 12 months adversely.
However H1 is yet to be reported so deal with that first, in late January, as a better than forecast H1 could affect market sentiment.
This trading year will most likely be down on all headings so let's take a peek at what to expect. First a recce of previous year's top and bottom lines:
. . . $m 2012 . . 2013 . . 2014 . . 2015 . . 2016 . . 2017
Revenue = 40.1 . . . 40.0 . . .47.2 . . .47.8 . . .39.5 . . .50.5
Net Profit= -3.97 . .4.37 . . -5.11 . . . .1.70. . . 3.73 . . . 8.87
. . . $m 2018 . . 2019 . . 2020
Revenue = 62.8 . . . 70.5 . . .115.0
Net Profit= 11.0 . . . 18.2 . . . 41.0
Analysts have issued market guidance on what to expect for this full year, and surprisingly the revenue and net profit they forecast for SLP this year, compared to historic progress above, look more than reasonable.
- But compared to last year ending June 2021, they will look poor.
Woe betide any company that comes in, under their market forecasts.
Look at the progression of the trading years above and see if you can identify the year, that I read in the media that "SLP dissapoints by delivering below market expectations".
I highlighted that review in a post on here, after one of the annual results above, as the SP fell straight after the results (SLP always falls after annual results anyway).
Can you guess from the above, which year the analysts were dissapointed with?
It was the last one above, the year ending June 2020!
- And I still can't see anything wrong with it, and given time, as the years pass, neither will any future analysts as the analyst post-results reviews/opinions will have become irrelevant.
The first thing you'll notice is that the yearly increases look most commendable, once the early years after SLP launched on the stockmarket are put behind it.
As this year ending June 2022 is forecast to be worse than last year, I've deliberately omitted to show 2021's fantastic performance and directly place the analysts forecasts as if it was the next year in line above to see how bad it looks, because it's going to be a stinker, right?
We know it's going to be poor when compared to last year so will look pretty tame next to the last in line of the years above, yes?
Continues > > >
It's going to be unimaginable for this trading year to finish level with last year The only question is by how much lower will an acceptable revenue and the bottom line net profit, be to the market?
And that means: lower than the market's lowered expectations - or better than the lowered expectations? But of course if better than expectations that's still less than the full year achieved last year.
Here's the size of it, first from the metals point of view then from the analyst's forecast revenue/net profit figures available.
Rhodium Q3 average last year = $23,450
Q4 last year = $25,781
Full H2 last year = $24,596
- In otherwords, only back to full Chip production could give any chance of even thinking about the mid $20,000's so the only observation in watching Rhodium is for, by how far short of that $25,596 average will this trading year's H2 prices fall short?
Platinum Q3 average last year = $1,169
Q4 last year = $1,190
Full H2 last year = $1,179
- Not a big problem; unconcerned when you have a comparison to Rh.
Paladium Q3 average last year = $2,424
Q4 last year = $2,807
Full H2 last year = $2,612
- Will fall short certainly, but these two metals are not in the same league of a problem as Rh is.
H2 expected performance should be baked-in to forecasts so technically unlucky if the SP behaves as if H2 comes as surprise, no reason to expect worse than this 80p's floor area, but must admit, current trends don't support that view.
Will look to bring up the financial forecasts next to finish off (and results achieved in prior years) when time, as still some extremley nice acceptable £££'s forecast by analysts, which beats the pants-off all prior years and then some, bar last year alone, despite the chip issue, monies forecast when looked at in comparison to the past 5 years look like Guinness book of records stuff, startlingly good, and v acceptable!
- It' s just that the market will compare to last year's biggest ever record performance to make judgements. Take last year's out of the picture, and this year likely still to be jaw-droppingly good when looked at in isolation. Will show those figures another day v soon, as out of time tonight.
Well I have the figures I want for the base price averages per metal only, devoid of any amelioration or filters of extenuating credits/debits transfers etc.,
Artrader - well done in putting in some effort in your initial post. I too have used Johnson Mathey's data. Hope you can do another review after the Q2 results are published in late January.
However, my data on initially, the whole current H1 period (that's barely more than 3 weeks+days away from concluding) is less bearish than yours and I'm more in agreement with Nutmegmilk's in that I find the whole of this year's metals performance to date (to Dec 2nd) does in fact contain higher metals prices (figures for the 3 main categories: Rhodium, Platinum & Paladium) than those achieved for H1 up to 2nd Dec last year (See below).
In addition, comparing the prices achieved to date against the full H1 data for last year and pre-supposing no more increases for this year, still leaves this year's base prices achieved to date, higher than the whole of last year's H1 only, period!
(Nutmegmilk's post shows 14,200 for Dec 2nd for Rh but mine shows 14,000). Close enough to be in the same ballpark.
- It's the H2 for last year that is insurmountable and for H2, I lean more towards your view but not as deeply, until the H1 is actually published as until the revenue is known it's entirely possible the result could be better than analysts lower forecasts.
Also as dire as I expect H2 to be, surely that's already baked-in to the analysts expectations? What's not known is whether the current metals prices " floor" are above or below their estimates made back then, that show in the current forecast for a) the full year and b) Might that be adjusted if H1 achievements are not as lower performing as expected. These are the data results I obtained:
Last year H1 up to Dec 2nd average for period = $12,513
This year's current period average up to Dec 2nd
A 27.3% Increase over last year!
Last year average = $908
This year average = $1,031
A 4.6% increase over last year!
Last year average = $2,265
This year average = $2,289
An increase but only just at 1% up.
Further more when you compare the price average achieved this year to date and compare to the WHOLE of the H1 period for last year it's still less when compared to this year's current averages, ie.,
Rhodium last year full H1 = $13,094
Platinum last year full H1 = $927
Palladium last year full H1 = $2,278
So, I'm much more optimistic for a better than expected forecast for this year's H1 results. Not higher than last year as several issues not least the obvious one that revenue due to the auto industry drop off must mean lower revenue - despite higher metals prices achieved in this year's trading to date.
(Will see if that fits in one post as it all gets turned upside down for H2 observations in the next post, where I expect a lot of your lower forecasts to come to the fore).
Top tiger … receivables that lag behind are all subject to change as I am sure you are fully aware (or not) 47m of sales are subject to forward price conditions …. Fair enough when the price is going up but you try to renegotiate when prices are decreasing by 50% …. I hear buyers saying but I bought in good faith at 27000 but is now 14000 …. and falling and we had an open deal remember? I’ll pay the going price when I actually pay by whilst the price is going down … I won’t pay until I want to (when the price starts to rise) maybe SLP need to sell at their price or not at all ….. ok when it’s going up but disaster when it’s falling
No idea who sotolo is tiger, but yeah. Cash in the coffers, enterprise value... i could go on :)
its prob an alias of sotolo
i assume in the fantastic 84p analysis that they have allowed for the receivables that lag behind cash received ?
Fair value of 84p today is the funniest thing I ever did hear on this board haha. Brilliant :)
I mean I could, but I just won't....
totally agree with you toptiger ... just made me add more!
sounds like we have another doom and gloom pgm person similar to the ths thread.
wants in to a fantastic company lower or just a.......you can fill in the blanks
Todays prices RHODIUM USD/OZ 14200 on Metals Daily - the average price for 1st quarter was usd/oz 17999
The basket price for 1st quarter was $2900 and for the 2nd quarter to date on average it is $2444 and based upon todays value it is $2350. I'm just making logic of the SP and what to look out for in terms of future value today there's a legitimate reason for the low sp mixed with actual prices of PGMs the lower production and outside effects. If 129 was the value during $3700 average basket prices of 2021 then 84p should be a fair value today.
Todays prices RHODIUM USD/OZ 14200
AVERAGE PRICES 1st Q v 2nd Q to date PT 1031 v 1006 rh 17299 v 14010 PD 2481 v 1938 ir 5314 Ru 724 v 609
TODAYS PRICES PT 952 RH 13,950 PD 1752 ir 4150 Ru 580
taken from Matthey
PGMs BASKET PRICE FELL BY 29% in the last quarters figures - here's all the figures JULY 2020- SEPT 2021
1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022
Feeds in tonnes 680,662 740,783 644,087 635,153 600,000
PGMs in ounces 24,300 24,900 23,600 21,200 20,397
Basket price $2,834 $3,323 $4,576 $4,059 $2,897
Net Revenue $millions $41.5 $43.7 $74.2 $48.4 $29.8
PGMs basket is not falling it is going up .... where are you looking ?
Velo Thanks for your interpretation of the way things are going albeit through the use of somewhat rosy figure work. The falling price of PGMs at the moment is a double edge sword as you know by last quarters price adjustment to debtors and unfortunately there's more to follow.
Whilst the price of the PGMs basket is falling it not only means that the current profit is falling it also means that past sales will receive a credit on their invoice (difference between todays price and their provisional price at the time of order/delivery).
This is the bit in the financial statement:
Commodity price risk refers to the risk of changes in fair value or cash flows of financial instruments as a result of changes in commodity prices.
It is applicable to the largest debtor of the Group. In terms of the agreement between the Group and the debtor, the commodity prices used in the calculation of the payment are based on the prices over the period following delivery, leaving the Group exposed to the commodity price fluctuations until the price is fixed. The subsequent remeasurement of the receivable every month following the month of delivery until the price is fixed, is recognised in other income, refer note 9.
The balance on the 2021 year end was $47m and a provision of 10% was mentioned as a risk but looking the basket prices from July 2020 to Sept 2021 it shows why 2021 was such a good result with increasing prices there was always a higher profit except in the 4th Quarter and THEN the dramatic change seen in the 1st quarter of 2022 - save you looking them up 1st 2021 $2834, 2nd $3323, 3rd $4576, 4th $4059, 1st 2022 $2897 - so you see a worrying downturn in the 1st quarter is carrying on into the 2nd quarter. Net revenue was still $29.8 million. However if the basket price in the 2nd quarter continues to fall say to BELOW THE CURRENT APPROX $2400 then revenues will need to be adjusted downwards again.
It wouldn't be so bad if production was up but it is also on a falling trend since April 2018 and here's the figures in thousands of oz up until Sept 2021 25.7, 20, 22.2, 29.2, 27.7, 25.4, 26.58, 12.51(covid lockdown), 24.3, 24.9, 23.6, 21.2, 20.40
This three way hit is whats keeping the SP down: credit notes, falling prices and lower production. The management are ramping up production again but can't yet do anything about the price of PGM's but the ramping up has hit a Covid uncertainty threat so thats why the volatility in SP in the last few days. I am invested here and have had a nice profit over the years including dividend and am not worried about the future I'm just pointing out why I think the SP is lower today.
Rhodium et al -
Here's the eyebrow raising bit I hope to show in the data averages:
Rh prices for Q1 THIS trading year and up to currently 2/3rd through this Q2, have actually been HIGHER than last year's Rh prices achieved, for the same comparable period!
Should the current Rh price not increase a single penny more, then H1 by December 31st, will still show a handsome gain in higher Rh prices achieved so far this current trading year, over last year!
(The end of this new month December, concludes trading for H1).
However, despite higher comparable period Rh prices, that doesn't mean SLP has taken as much revenue in Rh sales as last year. On the contrary, the auto industry's debacle suggests very much not so.
- The Q2 update in late January should reveal the outcome of that query, possibly with a positive effect upon the SP if actual trading figures are not as poor as the dour market sentiment has led us thus far to believe.
That leaves last year's Q3 and Q4 (H2) v this year's to account for; which is of a different order of magnitude and where all the negative damage will occur.
There should be enough momentum achieved in this year's Q1 and current Q2 to offset at least 'some' of last year's Rh ATH's.
And of course, will Rh prices also inch forward in 2022 or not? And thus maybe narrow the gap even further?
Will need to do the same exercise for the other PGM's, but have to see how much time I have available.
There's also the quality of the feed received for proccessing to consider, as it increases costs, although recent reports indicate an improving position on that front.
Hopefully I'll at least find the time to post the Rh comparable period averages, if not all the metals.
Then form a rough and ready guesstimate opinion in relation to the SP during this unresolved chip situation, in readiness for the big H1 reveal in February (Q2 reveal only, in January).
Many thanks Stoodio, for your very generous and fulsomely supportive post. Appreciated.
Incidentally, I concur wholly with your 2 year window. That's my view too,
- but probably for differing reasons with mine coming from using the route in the 'v weird' category :) :)
- - - - -
Rhodium post up next:
I'm pulled asunder these days and not back home until next week, hence the late night posts as mostly the only available time I have free, when away. No sooner back than I'm away again by late next week.
Whatever, I hope if able, to run-up some monthly and quarterly averages on Rhodium price comparisons, as after the beating Rh prices have taken in the latter part of this year I wonder if the findings will raise an eyebrow or two, and/or completely surprise a few others?
First a word on Trading Result forecasts:
Analysts have forecast a modest (modest IMO only) drop in SLP's revenue - but a much more severe and seriously damaging, larger drop in Net Profit for the current trading year, so can't argue with them
. . . or can one at least challenge them at the Q2 reveal in late January? :)
(Bare in mind for last year, that Q1 last year opened with early figures as low as $8,000 for Rh prices).
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