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A question worth thinking about is: "where will this be in two years time?"
Timed my entry point completely wrong there. 15% in the blink of an eye! Brutal.
Cash and receivables at year end June totalled $174.75m add the last 2.5 months and it should be around $200m so thats Arbitrage isn’t it?
Even though the Rh price is significantly down, I can't see there being much room for further falls. As said the cash holding as a percentage of market value is high and keeps growing even with the dividend. By the early part of next year we could be almost 50% cash of market value.
At that point we seriously become interesting as a takeover target for someone to buy just before the Rh price starts to pick back up. At our current level we would be the steal of the century.
To be honest, if you've done your own here and have a not so unusual casual pair of relative strength tungstens kahunas like myself, there nothing more to be said here that get stuck in at these prices, and reap the rewards down the line. That waiting line won't be so long before you see some healthy green on your screen :)
According to a report from IHS Markit. The report projects that semiconductor shortages across the automotive sector will extend into the first quarter of 2022, and possibly into the second.
https://www.scmp.com/tech/tech-trends/article/3148576/chip-shortage-will-drag-some-time-chinese-ministry-warns-country
Last year Ben at the brokers predicted $100k was possible on Rh in his dissecting the bear case for RH 29th Jan 21 i think it was. Heraeus said it would stay high, ST thinks it's worth 200p, and the broker still has an EPS, cashflow, and net profit way higher than 2021 when the company says "lower prices" and we are 3 mths in with Rh today at $12k. DYOR is the only way. There could be a squeeze next year when production picks up and outstrips supply, that is the time to go big IMHO not now. PGM's are not looking great, but timing your entry into things that don't look great brings the greatest rewards. Good luck with your decision.
Chatmandu, I couldn't agree more and have cashed in 30% of my SIPP already. I still see a positive outcome for SLP and finding it hard to sell at a loss, although my average price is now 99 (I did listen to the sound advice on here).
I do wonder what the floor for SLP is considering cash + assets + future profits looking positive, even at these prices. Surely that cannot be below 80p, as this would mean trading with 42% of its value in cash by end of September.
Ouch indeed...
I'm not sure where we'll bottom out or when the corner might be turned.
The news coming out of China is a bit worrying and American markets do seem to be a bit frothy.
https://finance.yahoo.com/news/stocks-could-be-due-for-a-correction-of-up-to-20-by-fire-or-ice-morgan-stanley-strategist-185927231.html
I've decided upon an overall portfolio strategy involving mainly ITs and have been increasing my cash position to take advantage of any corrections.
Personally, I'm now hoping that SLP's price recovers to a decent level before any market corrections occur. I'd ideally like to recoup my initial SLP investment (63p average purchase price) and run the profits. I could do that now, but it feels a bit painful after recent highs - I certainly don't want to panic sell.
To be honest, I'm a bit worried that a combination of PGM prices and wider macro shocks (especially a USA stock market panic/selloff) might combine to give SLP's share price a severe kicking and wipe out my profits. If we have a decent rally that puts us over 100p, I might bite the bullet and reduce my holdings / recoup my investment. I can always buy back in at a later date.
Ouch! Obviously, wish I had sold more before this latest drop below 93. Concerning as to where the PGM drop will end. What are the views here?
Still incredibly profitable but……
....checking in as have taken a position here.
Liking the balance sheet and especially liking the cash balance of 41% of the mcap.
I’m aware that external factors are currently affecting the sp but I can sit on this for a couple of years and I will be adding more. Dividend yield not too shabby either.
GLA.
I guess a lot of people have been burned when buying after the previous SLP recommendations.
The IC website shows all the previous articles relating to a share, so even cursory IC based research will show recommendations to buy followed by a falling share price - which is exactly what's happened this time.
https://i.postimg.cc/FRqWBc7T/image-2021-09-13-093517.png
I don't think we're going to see any improvement until the chip shortage ends and (if?) car production ramps up again.
Somebody on these boards questioned whether new car sales would recover in the post-covid 'work from home' world. I can definitely see the bear case (I'm certainly not looking to replace my car) but, perhaps, the macro trend of migration to the countryside will result in higher car sales as people can no longer rely on the good public transport systems found in cities?
Ultimately, time will tell. I'm not expecting things to improve until at least mid 2022.
I see Simon's latest thoughts have reached the IC's printed version today. Surprisingly no positive reaction. SLP truly out of flavour until PGM demand picks up.
https://platinuminvestment.com/files/165890/WPIC_Platinum_Quarterly_Q2_2021.pdf
and if Ed Croft says it
"Recent share price weakness comes as a result of softer palladium and rhodium prices (down 19% and 43% respectively on their record 2021 peaks), which have caused a drop in Sylvania’s average basket price on a quarterly basis. Importantly though, these markets are still forecast to be in deficit this year, the medium term outlook is favourable, and Sylvania remains hugely profitable at current spot metal prices. Its average basket price for FY21 was up 83% year-on-year to $3,690/oz - nearly five times group cash costs of $755 per oz.
There’s no doubt the shares look cheap - the forecast rolling PE ratio of 3.1x reduces even further after adjusting for cash to just 2x - but how certain can we be that SLP is in fact cheap, given the degree to which profitability is driven by commodity prices? The company has demonstrated that its results - and its share price - can be volatile in the short term but medium term PGM drivers remain positive and the group is forecast to generate nearly one third of its current market cap in free cash flow over the next year alone."
@toptiger
I agree it does seem high for such valuable metals, but I've no idea what the actual cost of smelting is and it's not in the accounts. Perhaps that explains the discrepancy, that's been discussed before, between the spot price and the price received by SLP?
@CommandoKai
Thanks for posting that video - it's a very interesting look at the company.
I guess we're now in for the long haul.
that guys smelter percent was a bit high !
It is always important to ensure you cover sentiment, technicals and fundamentals to get A+.
GLA.
OTH.
“Research alone won’t ensure a profit, your main goal should be to make money, not get an A in how to read a balance sheet”. ~ Richard Donchian.
An interesting review of SLP's status and current valuation calculations, probably summing up quite well the general market sentiment towards SLP at the moment: https://www.youtube.com/watch?v=6lDiAqH0OzE
Personally this is still my largest position and am relaxed about holding through short/medium term weakness, with the tight Rhodium market, any supply disruption would send the price off to the races again and regulatory increases should prevent any massive price collapse or make it very short lived at worst.
Guess its the 'momentum factor' influencing these 'ratings'. Quite happy with contrarian stocks btw :)
Meanwhile there's been a few bloodbaths in other intersting stocks. Watching the corpses. Maybe there are some scaps left?
Qualcomm boss came out yesterday and said chip shortage will be back in balance early 2022. Quite happy to park funds in a debt free, hugely cash generating company over the next few years, particularly in a high inflationary environment.
A better estimate based on how ST from the IC has calculated SLP figures in the past are:
eps 26.2p x p/e ratio of 4 = 104.8p and Cash of $106.1m equates to 27.9p/share.
Therefore ST calculation would be 132.7p.
Potential upside: Dividend + Special Div (Feb 2022) + Mine expansion in H2 FY2022.....
Last IC article published on results day..said BUY.
The chip shortage will certainly be continuing well in to 2022. However, over the next year the expectation is for the backorders to slowly reduce and automobile manufacturing to rise, albeit slowly but still increasing from todays levels. Rhodium will creep towards surplus, putting some pressure on price, before reversing this trend as production for cars ramps up later this year/early next year.
That said SLP has over $100M cash as of end of June. This is probably nearer $120M now and I assume significant receivables, which should be valued as part of the business. So, I agree 200p is wishful at this point but 100p is way of the mark considering current assets and even incorporating a modest short term drop in PGM's
that SLP has moved backup to being rated as a "Superstock" on the stockp.... site, whilst THS and JLP are rated neutral and contrarian; though personally think that all three are brilliant companies.