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Represents a nice little buying op for someone then, I'm all invested now in various things.
mm's aiming to bore short termers into moving on to the next rocket.
A flat week is eternity for the short term crew.
All sounds v nice indeed, glad I joined the club last summer then.
IMO, Just a pause as people wait to see what happens with the BOD's decision on the special dividend. The price got ahead of itself a bit as well. I think most here are expecting somewhere between 110p - 125p by the end of the month.
Also news feeding out of SA about electricity issues may be holding this back a bit.
LT hold for me.
Decent results posted in last report, price target raised considerably, undervalued from the point of view of pretty much any metric you care to choose, so why are we sliding sideways / trending slightly downwards? Just curious, in case anyone has 2 minutes to share their insight. Thx!
You can sign up for a free trial and see all of Liberum's broker notes on SLP at research tree. Its well worth the effort.
In the last week they published two notes, one of which gives a comprehensive review of the rhodium market. It is responding to the view that SLP is undervalued because of doubts around the sustainability of the rhodium price (which I think is a pretty fair conclusion)
They are forecasting rhodium to be above $20k/oz for the next 3-4 years and SLP to be reaping windfall profits, which underpins the 200p valuation. And they speculate that rhodium could head much higher, although based on a very hypothetical calculation of margin differentials between EV and ICE
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would like the article as well on gulp 100k rhodium
that would prob add 1500 quid to a car price alone !
Hi Ragnar
Where's the article regarding Rhodium cost.
Regards
I was thinking more 1,2,4,8,16,32....
If rhodium goes to $100,000/oz as Liberum speculates it could a 32p dividend is possible
Indeed Tiger. Unfortunately one cannot rectify ones mistakes once posted on this board. *sulk*
Fibonacci sequence would be 1,1,2,3,5,8,13 etc.
(Sorry, I'm a pedant...)
Rhodium price up significantly today.
"They are going for large increase in the dividend starting from a low base... 1, 2 and then 4c certainly captures the attention"
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Are they going for the Fibonacci sequence? Then the next one would be 6.
That's likely to be very old info. Liberum provides the only coverage of SLP. In the March note they had a dividend of 13c but in the note from a couple of days ago they are expecting a 4c special dividend and a 4c final dividend. I would expect this is the maximum to expect and would cost $11m each, probably paid in Q421 and then Q221. $22m will barely even touch the sides of the cash pile and at this rate cash will be $150m by December. They are going for large increase in the dividend starting from a low base... 1, 2 and then 4c certainly captures the attention
Indeed the yield sounds a bit high, makes me wonder as well...
Interesting to note, Stockopedia has a dividend yield estimate of 9.99% for 2021 from SLP. Not sure where this number comes from.
9.99% would be pretty big and close to the highest yield on the market, amounting to approx $38M being paid out at current SP. Cash reserves at end of June 2020 were $56M and should be around $73M by now as a low ball estimate. Anything above 5% as a dividend would be good IMO and should attract more of the larger investors going forward.
The following article also predicts a massive 14p to 18p per share dividend from SLP in 2021. Personally prefer to keep expectations more conservative.
https://www.valuethemarkets.com/2021/01/19/rare-earths-pgms-and-battery-metals-key-investing-themes-for-2021/
Some quotes and précis (in no particular order):
EV adoption to increase exponentially.
“China is replacing battery electric buses with fuel cell buses”.
Pt supply cliff crisis not yet envisaged via demand from hydrogen.
New demand sectors such as HFC being developed in part by miners, partly to improve their own carbon footprint. (e.g. HFC trucks to replace diesel trucks).
Analyst likes Pt, Rh, Ir and metals in vogue in light of ESG in general. Investors are struggling to take a long-term view.
If you’re pro-EVs you don’t have to be bearish PGMs given ESG issues and new stringent emissions regulations.
Pt currently in surplus but expected to shift to big deficit by 2025 (supply-side constraint). Marginal ounces require higher basket price.
Rhodium up last 5 trading days close to recent highs again.
SP currently lagging behind around the same price for the last 5 trading days. IMO just a matter of time before SP starts picking up again to reflect PGM prices uptrend, as we have tracked rhodium price trend quite well in the past.
The big increase in basket price and profits still to be priced in. Alot going for SLP at the moment for it not too, high PGM margins, low PE, record profits and % increase in profits, nice cash pile and windfall divi.
There was a time several years ago when the directors determined the level of cash required to be something like $25m and anything in excess of that to be paid out as a dividend. They have come up with various excuses over the years about why they need the cash and can't pay out a monstrous dividend. For a long time it was Echo (which is now complete), then it was because they worried the PGM price would tank and there would be a large price adjustment they would be liable for. So now they are keeping the cash for 'funding of capital expansion and process optimisation projects'. They spend < $10m a year on capex and the expansion projects aren't going to need capital until 2022 (earliest).
This behaviour has sometimes led me to wonder if the cash actually exists and there would be a Patisserie Valerie type scandal. Or that we would wake up one day to an RNS saying that the cash has mysteriously disappeared from the bank account like what happened to Ferrexpo a few years ago.
What they will pay is likely to be at a significant discount to what they can afford and we can expect. it always has been. You should moderate your expectations
Prices for PGMs all up today, including Rhodium, but SP down. Any thoughts?
Pretty sure Upside wasn't referring to a legal duty but a moral one. Anyway the point is moot as they have already said they are intending to pay it question is when and how much... how about $0.05 and end of June 21?
S
"A company has a duty to reward shareholders with the right dividend decision when cashflow merits it"
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No, it doesn't have this duty. It may decide to, if it cannot deploy the capital sensibly, but it never is under any obligation to do so.
Not that I wouldn't mind a windfall dividend, mind.
Slp now in the fortunate position of deciding what to do with excess cash.The Feb half year results will show how the cash pile has racked up again. PGM pricing has certainly created the opportunity for a ‘ decent windfall ‘ payment.A company has a duty to reward shareholders with the right dividend decision when cashflow merits it. The board did an excellent job buying back the obviously undervalued shares in 2020 but the time has come to reward the owners ( ie. shareholders ) differently. There appears little need for more than modest maintenance or expansion capex . Holding too much cash in a volatile (& risky ) Zar currency cannot suit £ sterling denominated shareholders. So its time to payout a good half year dividend now. Non executive directors / house broker do your job.
Buy alert on ii today. Bullish flag pattern. Short term SP target 133-139p for SLP