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buy in price, may or may not be at the basement.
Sylvania may be amenable to make some acquisitions in the same way that Jubilee appears confident in doing, they certainly have the cash?
House broker Liberian Capital believes we have reached peak microchip shortage this month. The price of Rhodium has already risen 12 percent from this month's low of $11250. One does appear to be following the other.
ZERO debt.
$106 million in cash and counting.
Net profit of $99.8m in 12 months to 30 June 2021.
"Based on flat production of 70,000 PGM ounces, cash profits north of US$120m (£87m) should be easily achievable in the new financial year." IC quote at current low spot rates. If Rhodium prices bounces back as is expected profts will be significantly higher than $120m
And here 's the odd thing: Market cap only £250 million? That is this is trading at only enterprise valuation of about 2 times cash profits. I seen other AIm shares trading at 6 times cash profits.
Either this is a bargain of the century or I'm missing something?
I've topped today as much as I had left under the bed, and stuffed in the leather armchair:)
DYOR.
“The stock market can remain irrational longer than you can remain solvent.”
Chatmandu - not with me buddy :)
How long is the chip shortage expected to last and what's the long term outlook?
From a reputable source: https://www.idc.com/getdoc.jsp?containerId=prAP48247621
Put it this way, its not going to last forever. Its expected to peak this month, which is coinciding with what appears to be a low in the rhodium prices. Some here are looking for the exact bottom, but given the strength of the balance sheet, and growth in earnings here, but I suspect they will end up buying much higher than the cheap price it currently is.
December 31st. £1.40+
Remember I said it :)
Willing to fall on sword.
Stoodio, That is a fantastic future prediction, can you tell me the highs and lows up to there? Many thanks in advance.
Little bit up, little bit down, not sure we're breaking the downward resistance around the 83p mark but Velo is better to ask there. PGM's will be rising drastically into 2022 as things iron out.
I think October / November might well be explosive. Eternal "ramper" here though in longer than a decade, so time will tell.
PGM’s just starting to move upwards. Rhodium up a bit, so predictably SLP goes red. Can’t make this up.
Stoodio, I do hope your 1.40 is right! The finances suggest it could, especially with another profitable quarters results in the bag.
The global tailwinds of stock correction doom are lingering.
ic152 - stock correction possible (if it happens, it;'s not March 20 all over again - nowhere near it in fact), but mostly false prophecy for me bro :)
DOW heading for 40,000 end of 2022/2023. You can lock that one in for the sword too :)
The finances (as you mention) and condition of this company operationally is splendid. We're sitting in the seat of the equivalent of an Aston Martin DBS Superleggera. SP slightly unreliable, just like the car. Otherwise so finely tuned it's a dream to ride. And Sylvie rides real good :)
I got to say this is one of the least stressful AIM shares I ve owned. Just put your feet up and enjoy the ride. I think SLP will be resistant to any stock market corrections - only thing that matters is the price of PGM which is determined by car sales, and with peak microchip shortage this month, there is only way that PGM prices is going to go, in fact boucing nicely off what could be the bottom.
Look back to Rh prices 1 year ago now, you will see they are very similar. The corresponding Q results at that time with lower expenses due to higher electric prices now gave a NPAT of $21m, cash went up from $55.9m to $60.9m, the SP was around 59p. Assuming these PGM prices level off as analysts predict due to chip, it makes it a profit of around $80m and EPS of 19p which was said last week calculated the long way, makes ST, & the broker look way off the mark. You "the market" gives this a 4-5x rating, so it's sat and has stopped at present at 86p for a reason possibly, not sure where 140p is coming from by December with what I see. As someone said a good 10-12% in and out possibly but sat waiting for 140p-200p I'm not sure.
Bangrak, in
June 2020 quarter :
Revenue = 28.03m
Net income = 8.54m
Cash in hand = 55.88m
Jun 2021: quarter
Revenue = 60.45m
Net income= 29.64M(£22 million)
Cash in hand=106.41M
You can clearly see the difference no?
Now we are in September, that is another 29.64m in the bank. so cash in hand is now =$136.05million(£100 million)
Now market cap of SLP now = £238M.
So. strip away net cash= 138 million. Assuming current spot prices annual net income = 22*4= £88 million. Now imagine if spot prices go back up to previous highs and why not as microchip shortages is peaking this month, net income could even double to £180 million.
But assuming net income of £88 million, and removing net cash, we are cuurently rated on enterpise valuation of only 1.6 timese net profit. This is hilarious as other Aim shares producers are rated at 6 -16 times net profit.
You can see why 87p is a joke price, and the there is material upside from this price.
The market is currently pricing in a PGM price collapse. Now sure if that happens current price is fair. But when the PGM recovers...... I'm fully loaded here. I'm not one to preach how other should spend their cash. But assuming I'm right, this would make it multibagger number 6 in the last 12 months.
Arriving at £1.40+ by December 31st is for me, pretty simple math. And if you don't see material upside, then I'm not entirely sure what your motivation is with this stock? I'm no trader, not interested. I invest for long term growth. There's been a pattern her the past few weeks so definitely has highlighted simple (almost too easy) trading opportunities.
But I'm a busy man. I'll just have Sylvie continue to do what she does, even with 'almost' (use that term extremely flippantly) irrelevant PGM prices,, that is, WE PRINT MONEY. LOT'S OF IT. Wakey wakey.
That rhodium price is also heading back to a wonderfully sustainable 17,000+ p/oz IMO.
Stoodio, I won't be falling on the sword like yourself, but 150-200p by first quarter 2022, is my price prediction here. I mean not sure if I would even call it a prediction. With cash balance sitting at £144 million first quarter next year(not discounting divendend payments), if price stays as it is cash balance would amost three quarters of current market cap. Clearly bonkers. But market is currently pricing a total PGM price collapse. When it doesnt this should rocket.
...end of first quarter 2022.
Just reading back, sorry I also saw a "sat waiting for £1.40.." comment. That's a weird one, its called, "investment".
That weird 'hobby' of sitting and 'waiting' has netted me a near 2,000% ROI. Yeah. I'm happy to sit and wait :)
Priceless commentary from a trader. It's all good. If everyone thought the same and all that :)
Indeed, Rhodium is up again today :)
"Investing is finding a great company, plonk the money down. Then sit on your ass and wait."
Charlie Munger
Priceless!
Yes Stoodio, that’s 4 straight-out trading days where Rhodium has risen consecutively; if it’s not careful it’ll start a new trend, LOL!
However, Rh also last rose 4 days consecutively by the close of August, then promptly did a further stinky dump leading from then, down to the apparent floor on 15th Sept @ $11,250 and now 4 trading days later, rising to sitting @ $13,400
It’ll do for now.
Also for circa 4 days, nay 5 days including today, the SP appears to have fallen in love with 87p. On each of the past 5 trading days the SP either closed at 87 or opened at 87. It varied how far it travelled to the opposite end of each day, but have yet to see an open or close away from 87 since Wednesday of last week!
Could be forming a flat base which have a reputation for ending, more often than not, bullishly.
Nothing wrong with guesstimates of 140, or those below £1 in the 80’s, or £2. We all need to be open to diametrically opposing views to test our assumptions.
The old cyclical tables I had (before July/August exploded in my face rendering my headless body something like the cat Scratchy in the Simpsons) showed £2 by January next year, so smiled when I read that £2 estimate below. However, after inputting the actual reality prices as each month has moved on, the table (with the old probability % calcs in place, for the remaining months now show the SP only closing in the lowly 100’s at circa 104/105 by end of this year.
- Whatever, closer to home I’m sticking to September to close lower than it opened. Should September do what it’s not fond of doing in September and close higher, then this chip damage is rendering all estimates under: anything now possible.
So, 140, 200 or 80’s, is all grist to the mill for me. As IMO it’s more a case of the market trying to find an SP level it’s comfortable with, whilst the chip crises recovery rages on.
- A sentiment-driven price whilst the crisis develops.
- Another sentiment-driven price for when that crisis dissipates away.
There isn’t a “one price” in these conditions :)
I’m not expecting a return to what once was (anchoring) any time soon, at least not until the chip issues are resolved.
what do people think of the future of this company as in 5-10 years time?
any company that has the same market cap as it's net assets has to be of interest as you are basically buying it at pretty much no risk and get any growth for free.
However the main use of the metals they mine is catalytic converters and with the push, in the west anyway, for a move to electric cars, are people worried the floor will fall out of the demand for these metals?
As I say I'm interested in how people see this and if anyone does see it as a long term play (and if so why?), so not looking to upset holders, just looking to understand the sustainability of this company.
Thanks
Is hydrogen gas cleanest fuel?
When hydrogen burns in air, it produces nothing but water vapor. It is therefore the cleanest possible, totally nonpolluting fuel.
https://www.globenewswire.com/news-release/2020/07/17/2063957/0/en/Hydrogen-Generation-Market-to-Reach-USD-208-86-Billion-by-2027-Rising-Demand-for-Fuel-cell-Based-Vehicles-to-Spur-Growth-Fortune-Business-Insights.html
https://www.reuters.com/technology/german-auto-giants-place-their-bets-hydrogen-cars-2021-09-22/
PGMS are used in hydrogen fuel cells which are the future. Billions are pouring in to this tech, which is costly right now, but will fall over time.
Don't forget PGMS are used in hybrids.