The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
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. 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.
SLP for many years has been a victim of its own success with ridiculous quarterly net prof margins consistently over 50%.
So it hits some reality and ONLY delivers single digit profit numbers.
It is a cycle. This is a low. But it won`t hurt you ! I should write a song about that haha.
I'm out but then I was always looking at the PGM price to guide me forward but I'm ready to jump back in as there is a safety net which will surely come into play and thats the net asset value of each share. The liquid assets value is roughly usd 184m in cash and receivables thats approx 56p a share and total assets of usd250m equates to 76p a share without goodwill and stock and other current and future explorations
It's actually an Arbitrage opportunity
I'm left wishing that I'd trusted my gut and sold out when they first announced share buy backs. I hate the things and it always strikes me as a management ploy to hit their bonuses, rather than something to benefit shareholders.
Now, do I wait and see if there's a dead cat bounce or get out and break even on my average purchase price?
I have taken some this afternoon based on the fact the stock looks materially oversold, to put things into perspective from a technical level, the RSI has not been this low since 2016, that shows how oversold the stock is currently.
As for the share price, it has not been at this level since November 2020, it looks to me that a bounce is well overdue, talk about a dividend cut and the share buyback being aborted is pure speculation at this time, no doubt there are shorts in play which will have to close out.
Is buying now right or wrong, who knows, however IMO the downside is limited, the fall from £1.12p in February surely factors in a great deal.
DYOR etc
Luna will be happy. he/she loves falling SP. No they they are filling their boots..,!
(Be careful what you wish for it might come true.)
Just another ebb and flow it sinks it rises, put it in the drawer, forget about it, take some money in divs and wait or put your cash in a bank and watch it wither over time.
Simples, as they say.
i stand corrected on your statement of near break even on current pgm prices just looked at my *** packet calcs and missed a decimal point i had them at £27m for a full year but it is £2.7m, that's a shock old age and all that.
hope i am wrong i'll look again.
Postponing or cancelling the buyback programme is a certainty under current
conditions, when they officially announce that in conjunction with a significant dividend cut i expect the sp to respond accordingly downwards.
That imo is a buying opportunity in a rising inflationary world a company still making money with no debt is a good company to be in.
I note your comments on payments which would be wise to change, I don't however see them at close to break even at current PGM prices they are doing better than that.
The cash pile is dwindling away - The Company have to change some of their policies. They hold their cash in ZAR and that is just going one way against the mighty dollar-in-war, last adjustment was 15% loss and the next one will be even higher. They also make adjustments against prior sales; if the price of PGMs falls/rises they alter the already invoiced sales, at the moment they have a huge downward adjustment to make that will actually affect the profit they have already banked in their quarterly figures. They need to cease this policy as it does nothing to encourage debtors to pay and many are taking over 100 days to settle whilst presumably benefitting from lower prices. They need to make strict payment terms at fixed prices. They have cash to see them through for a while so why not cancel the share buy back too? and if the PGM basket is below break even, which I believe its on the brink, then they should think about taking a holiday after all they deserve a break. They should also let the market know how they stand.
What the hell? IMO this is way over sold.
AS SLP have stated they will pay the dividend as a % of FCF, that is the reason I sold up, as I think they will not change this stance and suddenly pay it out of existing cash, that would not be the prudent way they manage the business. With the fall in PGM price the FCF falls with it.
One thing I didn't mention was the dividend unless slp are happy to see the cash pile dwindle away, which I feel they won't want to do expect a dividend cut at current PGM prices it's unsustainable.
Hope this bounces of 70p as does look oversold
ATB
This is now way oversold. True that the current basket price has fallen significantly, but we are still making probably around $5-7M net profit per quarter. Once you factor in the cash in the bank and the reliability of our operations, the SP does not make any sense. Happy to buy some more as we wait for PMs to recover.
Just watching the PGM prices it's possible this is not the bottom, if a recession hits perhaps the p/e might fall to 3 so in the sixties seems reasonable then patience with leeway to average down.
However even at low PGM prices slp is still making money you can't ask more than that in todays environment were reducing losses is seen as good form.
Hi RaxFactor,
I agree with you that something doesn't feel right with PGMs at current levels so far below analyst consensus. Wrt Rh I read somewhere about the release of stocks from certain producers who had substituted other materials. If that is the case then hopefully we should see a reasonable rise once that flushes through.
At what level would you be tempted to go back in given your calculations?
Thanks,
Prof
Sorry Bangrak I don't agree, by my workings at current PGM prices and 72k production I have profit of about £27m earnings 10p a p/e of 4 gives about 40p share price plus cash balance of roughly 37p so at today's lowly PGM prices 77p seems reasonable.
I don't hold at moment but I am watching how far this falls, all the forecasts for PGMs are higher than current prices and with car production increasing from the lows of the chip shortage and pandemic something doesn't add up.
Huge stockpiles by the car manufacturers to work through maybe, increase in supply from somewhere Russia maybe, forecast recession in the West depressing prices maybe.
At these prices only the low cost producers with a hefty cash balance are feeling comfortable.
Hi sorry for late reply have been doing some digging.
Sentiment certainly does seem down I can agree looking at the internet.
However is this an over reaction I note that you say forecast profit of "only" 39m with a market cap of 195.87 gbp that is still over 10 percent of the total cap of the company in profit a year this incorporated with a decent dividend make good returns especially with our current climate we are in.
Uncertainty of electric vehicles going forward and new technologies that can give 0 emissions for diesel engines, China starting bans on minerals and the car market starting to increase manufacture surely (I know dont call me shirely) this is short lived as that surplus can quickly turn to be outstanding.
Yes profits have been going down but they are still profits we are increasing production I think up to 74000 it mentioned from memory, the SAR looking more favourable new prospects such as lannex and reduction of costs going forward these all still seem like brilliant investing material.
All that being said who am I the market at the end of the day knows best and it definitely doesn't agree with me.
Thanks for the information provided as always very interesting going forward especially with what seems mixed thoughts from various sites / brokers.
Cheers
Bangrak,
Many thanks.
Best wishes,
Prof
Prof, Bangrak is in Bangkok so no issues, that's where I live anyway but not in BKK I'm on the beach in Samui. I've been out for a long while. I bought meaningfully here at 35-40p in 2020 on the shortage I saw in RH after the China lockdown as I knew the broker & net profit was wrong on RH prices......current basket x production minus all costs does not justify a share price of 79p hence why the brokers stopped buying yesterday and the drop, i assume everyone reading has noticed the rh price and the 50% soaking up of sales some days? TBH i think many are totally oblivious to what happening hence the need to shoot the messenger who, to be honest, was messaging this months ago, if it saved someone a few pennies then good.....
”Still a good dividend and good profit what am I not seeing.”
- - - - - - - - -
Hi Manu' - Probably, the trading forecasts -
Forecasts, that market sentiment has its teeth into, that is driving the SP in a downtrend, particularly after the H1 was published
- and the updated forecasts by the analysts since that H1 trading update, that turned the screws even tighter.
You might not be the only one that has no access to these forecasts; I only get them indirectly from my subscription packages, so I’ll share what I’m seeing on screen.
So made the time away from quick-reading only these days, to squeeze in a post.
Yes as you say, still a good dividend.
However, I would have preferred if you’d inserted the word “was” before the word good as in: “and WAS a good profit . . .“
And that’s because what follows does not make for pretty reading.
Friday 30th June just gone, was the last trading day of this year’s trading. Those results will be revealed by the Co. on Wed 6th September. (Can’t see any dates for the Q4 which they usually publish in the last week of July).
Anyway the last F/year results (‘22) revealed:
A) Actual -
Revenue @ $152m
with
Earnings/Net Profit @ $56.2m
Pretty decent huh?
So what are/were the expectations for this trading year ending June 2023?
Initially for:
B) Initial forecasts -
Revenue @ $175m
and
Net Profit @ $57m
Nice increases, yes?
I thought so too, but by the time the H1 was published bearish winds were howling through SLP’s habitat.
Those initial forecasts/estimates soon gave way to further downgrades to now currently:
C) - Current expectations -
Revenue @ $133m
and
Net Profit @ $51m
- huge drops from last year’s achievements.
But that’s not the worst of it!
Here’s the shocking bit, next year - the 2024 forecast - means as of today we are already 3 days into, and that is market forecasts of:
Revenue @ £125m
And
Net Profit down to $39m !
(I think the worst this forum’s permabear poster ever forecasted for SLP was earnings of only $40m)
But this brand new current year to deliver Net Profit in the 30m’s? #@@!*!!!
- NOoooo…..!
That’s what the market is expecting. Hence the effect on the SP.
Now the question is whether the actual results beat that forecast at C) and perhaps give sentiment a chance to become more upbeat for this new trading year
- but more on my mind, is if the company comes in, only “in line” with estimates (and don’t beat it) then what will the new forecast be for 2025, released soon after the Sept 6th results are published?
All-in-all, it's beginning to feel more like a multiple-year recovery, not something that will snap-out of it in the short term.
The first test is in 2 months time when we see the annual results in September.
Hi Manutdbo,
If you read my post from 0838 you will see why I was nervous and sold out and some of those concerns may be shared by others.
With regards to the specific drop today I don't know although interestingly there was no RNS from SLP this morning announcing that they had bought shares yesterday. Pure speculation on my part but if they decided that with the drop in Rh the share buy back was the only thing keeping the SP up and that it was not actually worth 78/79p with Rh at $4000 then the resulting drying up in demand for the shares could cause a sudden fall. It will be interesting to see in the next few days whether they RNS more share purchases or not.
Good luck whatever you decide to do.
Best wishes,
Prof
Why has this just nose dived off a cliff what's going on that I don't know about.. Still a good dividend and good profit what am I not seeing.
What is your obsession with SLP?
Plenty of other stocks out there.
Comes across like you have a serious grudge.
Hi Bangrak,
Apologies for the 'Bangkok' in the last message - autocorrect strikes again.
Best wishes,
Prof
Hi Bangkok,
Do I take it you are therefore out and watching as I now am?
If so are you still in THS?
Thanks,
Prof