China has tried to curb price rises with words on many commodities and failed, why would coal be any different? Richards Bay next contract is $225t, April $158t, Oct 22 $119t. EPS here is £3 at current prices and £1.65 on Oct 22, current PE 1.3 & 2.45. 30% paid out as dividend, company has way too much cash even considering the decom costs. Buyback or special divvy is almost certain.
Are you sure? Ben has now reduced the EPS down 15% to 38c this week, so the broker report only issued last month expecting more profit and more free cash looks to be well off the mark just like we said it would be. Using the last 3 months' prices (FYTD) EPS will be nearer to 32c or 23p and I do not see Rh rising much, Pal chart looks weak, all PGM's sub 200 day. The chip situation is not expected to ease until Q2 2022 and this inflation business is biting into everyone. Gas and Coal are the places to be right now and through winter, everyone ditched coal like they did Rhodium (it's boring & not needed going forward) now they need it desperately with the price driven up over $200+ a ton and $150+ on June 22 futures. Copper looks lifeless but ok for $4.20. SLP is fair value at 86-102p IMHO the lower being at today's prices the upper based on the last 3 months (FTYD). The moment china starts making lots of cars again, the price of RH rises above $15-16k then it's very likely game on here again and more so over on THS, but it's not going to be 2020 again. 2020 was for Rh what 2021-22 is for gas & coal.
Look back to Rh prices 1 year ago now, you will see they are very similar. The corresponding Q results at that time with lower expenses due to higher electric prices now gave a NPAT of $21m, cash went up from $55.9m to $60.9m, the SP was around 59p. Assuming these PGM prices level off as analysts predict due to chip, it makes it a profit of around $80m and EPS of 19p which was said last week calculated the long way, makes ST, & the broker look way off the mark. You "the market" gives this a 4-5x rating, so it's sat and has stopped at present at 86p for a reason possibly, not sure where 140p is coming from by December with what I see. As someone said a good 10-12% in and out possibly but sat waiting for 140p-200p I'm not sure.
All read before 8.30 am. Pages 43-45 are interesting, it's advisable to read this. I'm not sure Heraeus know what they are talking about, they expected Rh to remain high (but not $100k like ben) but now forecast the next 6 months for the average to be $13k with an actual surplus of 30k oz, so no RH deficit anymore, this is important to understand if you don't want to end up like markinvestor constantly losing money buying into lowering profits trusting tardy broker revisions. So on flat 70k production with much lower basket prices like SLP said, will you be getting huge $100m free cashflows and $120+m net profits and 44c eps? Some targets really do need to be revised here and the broker needs to be realistic, he is losing credibility maintaining these forecasts, there is a possibility of this comfortably generating $78m net, worth about 92p plus the cash but no more than this.
According to a report from IHS Markit. The report projects that semiconductor shortages across the automotive sector will extend into the first quarter of 2022, and possibly into the second.
Last year Ben at the brokers predicted $100k was possible on Rh in his dissecting the bear case for RH 29th Jan 21 i think it was. Heraeus said it would stay high, ST thinks it's worth 200p, and the broker still has an EPS, cashflow, and net profit way higher than 2021 when the company says "lower prices" and we are 3 mths in with Rh today at $12k. DYOR is the only way. There could be a squeeze next year when production picks up and outstrips supply, that is the time to go big IMHO not now. PGM's are not looking great, but timing your entry into things that don't look great brings the greatest rewards. Good luck with your decision.
Results as expected. During the last FY, Rh averaged around $18k with a spike to $29k caused by flooded mines, china bouncing back, and general covid disruption. The first 3 months of this FY it has remained around $18k, we now have the chip situation and generally more PGM’s available.
In the results, SLP say they made an extra $50m cash, production will be flat again at 70k and they don’t think PGM prices will be as high, exact words are “we are expecting PGM prices to remain healthy during FY2022, although not necessarily at the levels experienced during the past year”
However the broker note suggests sales will be $32m higher, the cash position will increase by $103m, and an extra $23m net profit. Off the back of this broker note alone, it looks cheap. But there is going to have to be quite a arise in Rh to achieve these predictions as we are already a quarter way in.
Whilst the technology team at the broker says they feel the chip situation will peak in september, you have Pat Gelsinger, CEO of chipmaker Intel warning last few weeks that the worst of the shortage is yet to come and that it would be “a year or two” before supplies return to normal. I wonder if the broker has got it right and if the company has much contact with him, they seem to contradict. To me, as it stands, it looks like 2022 will be on a par with 2021 mainly due to extra costs, we all can see gas oil and other commodities are rising. Vehicle production results from china are due this weekend but it’s predicted there will be a 16% decline yoy.
It’s easy to say this is undervalued and it's worth 200p just because someone who writes articles says so or a broker does but you have to trust your own research and apply logic on what you see. It's definitely not expensive but I cannot see the market driving this to 200p without a rise in Rh to 25k+ within 3-4 months. One for the traders now.
The 4 quarters gives $97.3m PAT, EPS 36c, cash up $55.9 to $101m with dividends paid.
Max SP price paid 150p = max PER 5.76. 5 yr pe ratio average 5.26. During FY Rhodium averaged $18.91k if you use http://www.platinum.matthey.com/prices/price-tables# & the July 20-June 21 averages. Rh for the last 3 months averaged $18.14k.
English patient, who said anything about forward PE. SLP has traded on an average PE ratio (not forward PE) of 5.26 on average over 5 years based on figures provided by the London stock exchange. Unless they do something with the cash, in about 9 years there isn't a lot left to grind up again and remove, life ends in 9 years without doing something that costs money and profits, do you think with a limited life like that that the market will give this a high PE ratio? Forward PE ratios are based on what just one analyst thinks of future profits and he is guessing RH which ranges from 6000-29,000 in just over a year. There is a possibility of 140p+ here as it stands as i don't think the majority cares about the DCF calculations 177p or cash pile. This is about to release results that many know already so people are buying and the shift will bring in technical traders watching the down trend which DGAFF about valuations. YTD RH is $22.5k, its average for the last 3 months has been $18.2k. On this $18.2k Rh and using an average of the last 3 months for the rest i get a profit of $104m eps 38c or 27p so 140p+ current PE ratio 3.58.
The london stock exchange site under fundamentals and ratios gives you the last 5 years PE ratios, for SLP it's 5.26, that's what you folks have decided over quite a few years so that's what i use. I see no reason to use more, it's SA its mine life is limited, even the TTM is 5.47. Not my rules these are yours. eps today 25-28p target 5.26x that.
Guvvi, historical PE ratio over the last 5 yrs has been 5.26 (using info from london stock exchange site) TTM 5.22 so I'm applying 5.24 to my net of $97m on RH of $17k to give me 136p, if you use the YTD prices (RH $23.1) i get $124m or 174p. As said previously, you need RH to be well above £22k to be looking at top corner 200p unless they do something with this cash pile. The divvy is ok but you can get 12% with Evraz of FXPO. Bit of a trader's one now for a while.
Even if you strip out the entire Rh production figures from the calculations you struggle to justify this current price, to get to a 110p fair value using historical pe ratios I've had to reduce Rh to minus $8k. TNAV is 113p, it's a solid buy here. Message to Tharisa, perhaps you need to engage a PI friendly broker like SLP does, having 6 brokers that don't make their research available on platforms like research tree is a big reason why you are lagging. Also, you need to seriously consider a buyback at these prices. There is a 100% gain here on an undemanding valuation.......that doesn't happen very often.
They had $101m at 4th Q results that's £75m. At 90p the BOD should be buying back shares as opposed to buying back shares at 130p from employees. Why not wait until there is a definite rise here, falling knife, catching, and all that stuff?
How exactly is china supposed to use less steel when it's building huge cities and trying to get the rural folk to live together? Is this like the poor copper threat which was at first concerning until banks pointed out China has about 2 months of copper in reserves? What's next, please do more exercise but use less oxygen? The stock market is like a stray dog, runs away at any sudden noise, and then takes days to calm down once it realizes it was insignificant. 65% fe futures July 2022 needs to bottom first imo before i can work out if the analyst's consensus are right with $145t plus pellet premium. I think they are a bit too low myself.
I've been buying some at 99p as I'm anticipating the masses to work out in 2-3 weeks that Rh isn't crashing further and that it's still in demand and that $18-20k gives all PGM miners a decent level of income still, 160-165p now imo. If you like profitable cash generative businesses smashed down due to china metal speak and a seller, then cast your eye over ATYM. Looks good, just think that value investors attracted to SLP will appreciate it. copper at $4.33 2021 eps about 70p on my calculations, consensus eps now upgraded to 71p this week. Has traded on a PE of near 10 for about 5 yrs. Anyone with any other 100% possible next 1-2 years?
I think a week or two is needed here before it's safe to say it's game on again, a rise above $20.5k for Rh and some stability in car productions and registrations in china will help, i think that data is due next week. 103.9+ is indicating something moving might be worth watching that area.
RH stable at $18.4 on JM for 6 days now up to $18.9 today over my way. Still too early to say this is a rise but it's fair to say you can probably use $18=19k in calculations with a 5-6 pe and be conservative at 160p. Further eps downgrades from the broker last week as expected and mentioned a few weeks ago, 2022 eps cannot be higher on flat production than 2021 so ben is adjusting down slowly to a 2022 eps of 40c imo. No TR1 from AAC after that fall which is odd as they must be selling. 98-100p looks ok needs to pass 112p before the high fives return. Ok value, not 100% but good.
Even if you assume prices reduce to a 200 day average on the SGX 65% 7/2022 futures at $150 and remain at this level and build in a lower pellet premium ( i recall $30 mentioned in the report last year) it's still $180 and an eps of 112p so 600p comfortably. The only point made by the heckler last week at 7 am that I do agree with is that things don't tend to go up when the commodity is in a correction, but unlike Rhodium, iron isn't likely to be a huge swinger. So this is all about china issuing some comments again at the right time on a chart to knock the edge of a commodity and unsettle the traders. Give it a week and it's game on again just like copper was.
62% iron ore is likely to go to $140-150 on the chart, so the 65% will probably go to $170, that's the chart law usually.
65% next contract in front SGX , support channel near $179, same 65% SGX futures on july 2022 contract is $173 today, all pointing to $170 as a figure to use further ahead, with a pellet premium on top of say $60 gives you $230t or $2.65b revenue $1.16b net or £841m, eps of 143p pe today 3.35. DCE July 22 contract now $130 plus 65% premium and pellet premium $220. At this stage, I'm therefore guided towards using $220-230 per ton. I'm using a PE minimum of 5 but think 6-7 is fair value and still has a 40-50% discount to other producers. 700-900p area as fair, so same final conclusion as lucky, 100% here. So maybe not a good idea to run for the door when people shout fire in the theatre every morning.
Could you/anyone explain why you think this is worth 200p, I see people using "Simon said" or "the broker said" maybe if we had some homemade figures however they are calculated we have a consensus, maybe some people who admit to not being numbers men might realise that the power here is in the hands of the PI and pick up a few tips. I'm financially trained but not in accountancy. I have a basket price of $3709 using the prill split in results and the july Rh average of $18.8 and current pl/pal prices to keep it simple, x 70k, minus about 58% costs which is $108m turned into £ and divided by the shares in issue i get an eps of 40c of 28.8p. Using the average of the last 5 years PE ratio from the stock exchange site listed under ratios 5.26 and the ttm from stocko 6.13 i get 5.7. my simple way gives me 164p as a fair and undemanding valuation today andone can understand. If i use a trailing 3m rh $22.6k i get 185p and my minimum 80% gain. I also have a DCF which gives me 175p using a lower basket of $3.3k and 2k in years 5-9. Broker has eps as 46c or 33p so this gives 188p.
The best thing i ever did was to set up spreadsheets for every company, I wish someone told me this was crucial when I started buying rubbish years ago, i could have retired at 35, not 38, and spent even less time living in the UK than i did. And to think that the person who admits to being "no expert" advises you to block people like me....strange chap indeed, we canall learn from someone.