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Mike, just what I expect 1.5c divi, but the nub as you suggest is going forward. The PE is 3 in the rear view mirror. Next year if this share price was maintained profits could well be half making the PE 6 which is not amazingly low given Karo risk a lessening pgm demand. The dividend tells the story 9c 7c 4.5c accounting for a share price halving with a bit more baked in for next years profit fall. If halves again and we get a divi of 2.25 then presumably share price will again. However with most profit now from chromium the ke for me is if that continues to decline. If it turns back up then we shall be fine….if
The anticipated EPS of 27.5c/share is about 18% down on my expectation which will now result in PAT of around $84m and total dividend of around 4.25 to 4.5c/share so the final dividend will probably be 1.25-1.50c/share. I suspect the lower profit is a result of having to buy in more 3rd party concentrates at the Tharisa mine and bigger losses at Karo. The actual result out on the 14th suggests some heart searching and delays in the last week or so.
Still big decisions needed on Karo as others have said below, the Company really needs to explain the forward path so for me it is not yet a buy on an income basis if the profit could be lower in 2024.
Is it 15% of 27.5c so approx 4.125 cents and we have already had 3c ?
With "the dividend policy of distributing at least 15% of consolidated net profit after tax"
And lets say the headline EPS of USc27.5 FY23 can we work out approx consolidated net profit or do we wait to 14th?
Thinking this could be a buy on an income basis?
"Would be much better at current market price to have a split buyback/dividend policy in my view"
That policy has not helped Sylvania Platinum's (SLP) share price.
It is a great shame that management is still determined to commit the majority of surplus shareholders funds to Karo.
When the projections were produced the project was based on a basket price of $2140 which now appears optimistic to say the least((it is now just over halff this).The palladium content at Karo is around 40% which is the PGM with the most pessimistic outlook -the success of this project is now solely based on hope of a material recovery in PGM demand which of course could be covered by ramping up production in SA (not long ago the company was aiming for 200000 ounzes here and of course the palladium content is lower)
if the company wants to diversify it should move into other metals and then risk is further spread -perhaps a copper tailings project with lower capital outlay and quicker returns.
would it be possible to adapt the Karo equipment sitting in boxes to process other metals
I believe that this "news" had already been baked into the shareprice. Incredible to fall below 60p given the assets and cash generation.
Taking the IAS lower diluted figure and dividing it into a price of 60 gives a PE of 2.8. These almost surreal metrics are a testimony to the bombed out nature of the London Market. No wonder Tui are thinking of leaving!
Still a bargain is a bargain! Yes the Karo venture was ill timed. Platinum will not be required in the amounts envisaged by its supporters since the hydrogen part of the de-carbonised economy looks to lose out to the battery part.
What will interest me is how many of the older higher cost mines will close thus choking supply and providing support for the PB price. I think salvation is more likely to come from that direction than from rocketing demand.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Would be much better at current market price to have a split buyback/dividend policy in my view
We have committed to the div policy, surely that is an excellent way of returning cash to shareholders
Brokers comments very encouraging although once again shareprice do no way reflect these.
It’s a great shame that the company can not commit a few £ million to share buy backs which would help maintain the shareprice and result in a greater increase when PGMs recover
Peel Hunt
Tharisa#: Trading update better than we expected
• Tharisa has announced expected headline EPS of USc27.5-USc28.5 for FY23, which is noticeably higher than our own adjusted EPS estimate of USc24.5.
• We take this as a signal that group profitability is stronger than we expected, despite the lower PGM prices realised in recent months.
• The shares reman cheap in our view, trading at 2.2x FY24E EV/EBITDA and just 2.9x PE despite offering strong cash generation.
We continue to view Tharisa’s co-product PGM/Chrome mine as a high margin, high cash generating asset. We believe it is more than capable of funding the Karo development while maintaining dividend payments. We reiterate our Buy rating and 195p TP.
Berenberg
● Tharisa has released a trading statement ahead of next week’s full-year results (to be released on or about 14 December according to the company). EPS on a fully diluted basis is guided to USD0.27-0.28 (+/-10%), with headline earnings per share (HEPS) on a fully diluted basis guided to USD0.275-0.285 (+/-10%), above our USD0.21 estimate for EPS and HEPS. EPS and HEPS are down by between c48%-50% and c31-33% respectively relative to FY 2022, due to lower platinum group metal (PGM) basket prices and weaker production on the back of lower recoveries and ore throughput, as outlined in Tharisa’s full-year production update released on 17 October, which we covered in a note available here. Tharisa has reiterated in today’s statement its commitment to its capital allocation strategy, including the dividend policy of distributing at least 15% of consolidated net profit after tax, and to its Karo PGM development project in Zimbabwe. As previously announced, the commissioning of Karo has been delayed to June 2025 in light of PGM market weakness, which we view as a prudent risk-management decision.
● Platinum finds a level: Platinum prices have found support around the (albeit weak) USD900/oz level, with the World Platinum Investment Council forecasting the deepest market deficit on record in 2023 as autocatalyst recycling rates have remained subdued (down by 16% yoy) while industrial and automotive demand have picked up (both up by 14% yoy). We think continued supply disruptions and cost curve support will likely underpin platinum prices in 2024, with the market expected to experience a consecutive year of deficit – a key driver for better prices will be how above ground stocks are worked down. While PGM prices are weak, it is important to note that Tharisa has the diversification of chrome co-production, which has supported cashflow generation while PGM prices have been weak. We now forecast that 68% of group revenues in FY 2023 will come from chrome and similar levels in FY 2024-25, providing added support as Tharisa executes its development strategy and works to bring Karo online in 2025.
Well there is the reaction to the expected down 13% at open, what do any of you number crunchers think?
Cash adjusted per to 1.1, meanwhile over on SLP it's 7.2.
Whoever it is that is killing this one on any rise and for whatever reason they are doing it, it's just destroying interest in what appears to be a good business. Stop that and you can see a decent re-rate.
Moneyman, the concentrate 42% was over 300 in Sept and near 310 in May but has been paused just last few weeks on its apparent staircase down at 282.5
However HC Feerochrome 50% has come down from near 330 earlier in the year to 255 on the THS weekly figures, and down nearly 2% just in last week probably halving profit from this? The big question is whether the trend of this year continues but I see no reason not, while rhodium has hopefully found a floor (though not platinum or palladium)
Sotolo-where are you getting your chrome price from..?
According to metals daily and the company website it has not moved since 14 Nov and is still circa $280 ?
PE ratio is less than 3
So will final divi be down to 1.5 c? PE looks below 3 but looking forward that will increase and if chromium continues to fall further by quite a lot unless the share price fall further? We are in the hands of pgm and chromium prices
Commitment to Karo is very concerning. With the level of uncertainty regarding the PGM market, I can't fathom this. Even worse, in a jurisdiction as rotten as Zimbabwe. The mind boggles. At the very least, I hope there is an indefinite delay to construction announced when full results are released. I expect further weakness today.
Trading statement – Results for the year ended 30 September 2023
In terms of section 3.4(b) of the JSE Listings Requirements, companies are required to provide guidance
to the market when they are satisfied that a reasonable degree of certainty exists that the financial results
for the current reporting period will differ by at least 20% from the results of the previous corresponding
reporting period.
A production update for the financial year ended 30 September 2023 was released on the JSE Stock
Exchange News Service and LSE Regulatory News Service on 17 October 2023. This highlighted lower PGM
basket prices for the year but higher chrome concentrate prices and stated that the timeline for Karo
Platinum project development had been revised as a direct result of the weak PGM prices and volatile
macro economic conditions in order to provide flexibility and to align with funding availability.
Tharisa's basic earnings per share ('EPS') for the financial year ended 30 September 2023 on a fully diluted
basis is expected to be between US 27 cents and US 28 cents with a tolerance of 10%, a decrease of
between 47.9% and 49.8% relative to the EPS of US 53.8 cents per share for the previous year.
Tharisa's headline earnings per share ('HEPS') for the financial year ended 30 September 2023 on a fully
diluted basis is expected to be between US 27.5 cents and US 28.5 cents with a tolerance of 10%, a
decrease of between 30.7% and 33.1% relative to the HEPS of US 41.1 cents per share for the previous
year.
The Tharisa plc Board and Audit Committee remain committed to the Company's existing capital
allocation strategy, including its dividend policy of distributing at least 15% of consolidated net profit after
tax, and to the Karo Platinum development project.
The financial information on which this trading statement is based has not been reviewed by the
Company's auditors.
The results of the Company will be released on or about 14 December 2023.
Sadly going forward not quite so rosy as Chromium also now on the down escalator albeit more slowly
Very strange -thought we would have an indication of the result date by now -we were told ten days ago the accounts were being consolidated which should not take very long.
We know that the mine in SA has being operating profitably due to the quarterly production figures and the cash balances at 30th September-I still think the delay will be due to debate over the carrying value of Karo and a possible write down in this
Over to you Tharisa