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Visitor/Sotolo/oufc, I agree with your comments. Based on a H2 average chrome price of say $270/ tonne and PGM basket price of say $2700/oz I calculate Profit Before Tax in H2 will be split 30% PGM/69% chrome/1% agency +trading+manufacturing. (this assumes the basis of shared cost allocation continues to be split 80% PGM:20% chrome but THS will eventually adjust this in line with revenue).
The H1 results today where generally better than I expected. H1 PBT was $124.3 million but included the one-off $48.6 million gain from the Karo deal but IF chrome/PGM prices ae maintained then my prediction for H2 PBT is $162 million or $286 million for the full year. That gives profit after tax of about $226 million which at the current share price is equivalent to a P/E of less than 2.5.
So I totally agree that the current chrome price is not being reflected in the share price. The other big factor is, has the Karo project been valued correctly and on the basis of about 40% external financing/60% out of THS over the next 2 years this is going to hit the cashflow in a big way. Time will tell!
We've also now absorbed all the costs of the Vulcan plant but have yet to reap any of the benefits. H2 should really see the chrome side of the business powering ahead into the strong (hopefully) chrome prices.
Thanks Visitor, but why then is headline eps down almost a third, and ebitda quite a bit too? Or is that because rising chrome and falling PGM’s hadn’t quite worked their way into these backward looking figures?
In terms of Chrome, I don't understand why some are under-estimating the impact of chrome prices so drastically. At $294/tn and 1.8mt p.a., rising to 2mt, chrome is far far more than 1/3 of profit, it will be over 1/2.
In these Interims Chrome was $175tn, they're now at $294tn. That's a difference in additional EBITDA of some $200m+.
Based on these results THS has PE of 3, however on a Forward PE, it will be far lower due to current chrome price. It's funny years ago how long it took the market to understand THS Rhodium exposure and even when Rhodium was exploding in price, THS stock price took a long time to catch up. THS PGM Basket Price is still extremely robust, yet Chrome price has absolutely exploded and feels like the market hasn't quite understood this yet.
That seemed to work, back in at 138.8p. Been out all day, plan to catch up on the meeting this evening.
I took a punt on selling 1/3 of my holding yesterday, had a feeling. Will pop back and buy back this morning sometime. Still have confidence here, I see this SP mirroring the PG metals prices which seem, hopefully temporarily, to be in a slump
Whatever! THS is my largest portfolio holding at 6.5%. Will re invest the dividend, but other than that I'm happy holding. I like share buy backs, but this company genuinely has better places for the cash. Very happy with the growth since I invested.
Sorry top my stupid maths! However “ The headline earnings figure can be further used to arrive at alternative metrics like headline earnings per share and improve the information content of the P/E ratio. ” using more useful hence PE would be 6
Sotolo, 25p is a 6 month EPS, annualised 50p? PE of 3?
Quite so oufc, as said I too stay in as they invest in sensible and enhancing projects and will grow, with experienced and visionary management with skin in the game; we can’t do anything about the vagaries of world economy, hence auto demand hence PGM price, also the PGM production rise is pretty impressive and chrome exciting. Do yo think at these prices chrome is now a third of the profit?
eps of 25p for 6 months makes full year annualised pe of 3, if things stay the same
As always depending on what metric you concentrate on the results can be glowing or dire! I personally think the main thing to consider is the growth element, when the vulcan plant is firing on all cylinders (hopefully about now?) this should help reduce our chrome cost per tonne, the karo project has the potential to really boost the company revenue. If on the way to this growth we can collect dividends this can only enhance the share price over time.
Don’t Eps of 25p gives PE of 6 not 3 at share price of 150, also if based on fairer headline earning per share, which halves them, would be 12? Nice to see the payout 19% when has often been 17% and only 15% aimed for, just a shame profits are so down, presumably if PGM’s stay here second half will be worse as more inflation and won’t benefit from the better PGM priced first quarter. However I expect PGM’s will continue to fall a bit further in expectation of recessions worldwide so lower auto demand, however looking longer term I love THS and stay in it as they reinvest in sensible projects, also car demand through Asia and Africa should grow especially if/when recession ends and there will be an awful lot of vehicles round the world to replace with few newer ones recently sold so many getting long in the tooth.
Main item for me is, delivering on strategy, and they are. EPS around 25p for only 6 months is superb. On a PE of around 3. I'm well pleased.