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Nothing more than Slyvie being her sweet as pie self and oh so generous self once again. Such a sweetie. She backs it up from time to time to let everyone hop on board for the ride. Has been doing the same since day one. With 6 trading days let to the month. Where we going?
Nonsensical to think anywhere but up with bumps along the way for the aforementioned reasons and nothing more.
Fully expecting this to be back high £1.30's month end. Simply because the current valuation is WRONG. And yes, got that from the dummys guide to investing too :)
End of June I'm expecting north of £1.50.
U said it Stoodio.
Besides the growing cash pile (debt free companies tend not to go insolvent - Peter Lynch not me) even if the basket price falls leading to a -1.25% drop in earnings for next 5 years and only quarter of 1 per cent growth thereafter (next 5 years) with a terminal value of PE 5 and a rate of return matching the S&P 500, the intrinsic value is 180p.
But those assumptions are beyond conservative as to be a bit silly really. I mean why with negative to flat line growth would an investor seek a return of 10% that does not really make much sense to me. if you push it down to 7% the price is 213p
And, is negative to flat line growth realistic in the next 5 years? Hmmm....well I don`t have a crystal ball, but...
S
FWIW I'm fully expecting this to pop right back up to where she came from in short order. If 10 years on being invested here have taught me something, it's taught me what this dip was :)
On cue Stoodio, rising nicely again.
BOL
Stoodio, indeed!
This one often has a 10-15% pullback. I had my limit order set to 128p and it dutifully hit it.
The price is still ridiculously low.
Indeed, there it is :)
Let's get back to some form of normalcy up above £1.40 so we can all reassess again how ridiculous it would be for the SP to be priced at such, £1.40.
£2 chips can start a conversation. Until then, we shall just continue to talk amongst ourselves :)
The analyst from Liberum (it'levelstindependent analysis fyi), mentioned that the current price still assumes rhodium and $5000 levels.
TBH, at £2 this in would still be at a substantial discount to fair value (by that I mean at least 50%).
Slater and Graham would have had a field day with this one....
Oh this terrible forum software where ads interfere with the typing on mobile devices....
I meant to point out that research from Liberum is not independent research, since it's their broker.
This doesn't discount what they release, it's worth to be aware though.
Most research isn't independent anyways....
Luna, Just as an FYI, myself, and other investors of SLP from back in the day were DRIBBLING over our cornflakes when Rhodium hit $5000/$6000 levels for SLP bottom line revenues :)
Food for thought. Very very very important food for thought that :)
This will be one for the ages. Let's see if he's still lurking:
AbuDhabiTrader.... are you still alive ma man? It's been a loooooong time brother. Hope you're well, and frankly, stayed the course here?
This is what Ben Davis published (sp was 140p)
"The current share price implies the rhodium price falling to $4,000/oz from over $20,000 currently."
Apologies for not remembering correctly....
Hi Stoodio!
I actually looked into buying some rhodium metal rounds when the price hit $3,500, because I was convinced it would go to $10,000. But the 50% bid/ask spread put me off. A dumb play that.
Then, to compound the error, I looked into buying iridium rounds when that was at $1,500. But again the huge spread put me off.
All in all, it would be worth back-engineering both the current SLP and the Tharisa share prices, to see at what rhodium price they would trading at "fair value". Both share prices massively undervalue the companies with rhodium trading at $28,000/oz or so. I'd guess that the market (inasmuch as it isn't simply asleep) is pricing in a long term rhodium price of - maybe - $4,000 / oz.
And I think time will show that assumption to be hopelessly pessimistic.
Tiger, completely agree with you. If Rhodium falls (not anytime soon in my 3-5 yr view) then you also have to watch what happens to Platinum :)
Win win.
Yes agree TBTT, Luna and the Stud(io) :) et al
I`m trying to ignore Rh ATHs and work through their 17-year historical av. basket prices to align with annuals earnings to get a ratio to input as the start of a (worst case/" margin of safety") DCF valuation which ignores the real and ATH prices.
What is required then are growth assumptions (which is anybody's guess). The fading out of PGMs in ICEs over time may be offset by expansion in/explosion of fuel cells. (I will post a link to an interesting article on that.)
For now, I will use low medium and high growth assumptions and then discount back at what for me is not a greedy rate of return - 12% to 15% with a terminal value assuming a blend of the risk free rate and GDP (again, conservative).
I have a feeling it will land at the 200p mark which is bonkers if that is the case but will see.
On a side note it is fascinating to read back over the reports and see how they started and where they are now, their evolution if you will. It is also a useful way to asses, risk.
S
Is there any possibility in the next 6 to 12 months that SLP will need a placing to generate funds? I see they have cash and have less shares in issue due to buybacks, which I like, but these types of business are expensive to run.
Seriously? I suggest you go and read their annual report and subsequent Quarterlies.
Shanny80, had to check it wasn't April 1st. Jeez, last 18 months such a blur I din't even know it was May. Thanks bud, that was the funniest post of the year if not the decade :)
Hi Shanny!
You have got to be joking with that post!
This is the most embarrassingly debt-free and cash-rich business I think I've ever seen. In fact, I'd go as far as to say that what to do with all the cash they have in the bank is SLP's biggest problem. Which, as problems go, is a high class problem to have.
I just mean in way of any grand expansion plans or may be acquisitions, also plant and equipment is very costly. A joint venture may be needed with a bigger firm with deeper pockets for equity, global investors are moving away from heavy industry in favour of cleaner sectors. The capital squeeze started a couple of years ago, a number of specialist funds have shut up shop. Mining companies may be forced by governments to become more sustainable and run on renewable energy. Granted this is much further down the road than I said in my earlier post, it's just what I'm considering before buying. Guess I'm looking for any red flags to put me off as the company is in great shape, everything points to a strong buy at present, hence why some have topped up on the latest weakness/dip.
You realise they operate out of Africa? That continent will be the last on earth to go renewable and certainly won't be anytime near before our end of LoM
Hi Shanny80,
Many thanks for sharing your thoughts re risks. Indeed, some rather good points in there. You are aware that they process tailings and thus have a different risk profile as to a 'regular' mining company?
As far as future growth is concerned, capital projects such as commissioning of optimisation projects (plant and equipment improvements -- that might cover de-carbonisation projects in the future), as well as mineral asset development and opencast mining projects (those can take up to 5 years to come online). The CEO's review in the latest AR elaborates on these.
As far as going carbon-neutral is concerned, I am skeptical about current plans worldwide. Hydrogen production is not carbon-netural, and energy generation from all renewables by the proposed cut-off dates sounds rather optimistic. We also don't have enough platinum to convert all cars to fuel cells, and the need for faster refueling and a more robust power solution for commercial (and private) transport is still not clear, nor do we see clear plans and funding to provide infrastructure.
Although I applaud cleaner environments, SME's will tell you that 4/5th of the world's CO2 is absorbed by the oceans whose lifestock has been severely reduced since the 1970s as well as it's ecosystem damaged. These figures coincide with the sharp raise in CO2 levels on the planet.
I am not an ecologist, but the point I am trying to make here is that the path forward is anything but clear, neither is it established. It could be subject to rather unforeseen disruption.
Maybe that's what the market is telling us with this ridiculous valuation?
Don`t over-think this.
The capital equipment in the washing/recovery plants has been in place for over a decade. Of course capex is required on maintenance, but that is not a risk factor If you look at the amount of Capex and then look at the amount of depreciation on PPE they are approx. the same (2020 Annual Report)
Phil Oakley (I recommend anything he authors) suggests a simple rule of thumb: take the Free Cash Flow per Share (FCFps) and ask how much of it is built into the EPS. At 80% Phil says a "definite candidate".
SLP is 100%. FCFps = 29p and EPS (ttm) is 28.7.
Based on forecast (Q4 - 30m) 20/21 $111m net profit, $5.2m capex $5.74m depreciation
If this doesn`t scream buy, not sure what does.
S
Sirius, indeed, indeed!
It screams "buy everything" ;)
I didn't know their risk profile is different to that of a normal mining company. My research has gone as far as the accounts statement, RoC, RoE, ROCE, EPS growth etc and any risks I can foresee. Risks are a long way down the line so hopefully no spanner in the works anytime soon but the market seems to be factoring in a wide safety margin at present, just makes me cautious as, like is said here, the current valuation is ridiculous. But like Sirius says, don't overthink this, I'll probably be gone before any issues of equity raising are required, but just one RNS can change everything and spook the market, I've seen this back in the day with oil shares pre and post the 2008 financial crisis.