Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
From a cash perspective the company is looking incredible, but I'm just curious on whether the company can continue the momentum from Covid, and gain a larger market share. I plugged some numbers into my valuation template and forecasts a 30% growth for the next 5 years, with the new warehouse and facilities being built. We're looking at a potential value of £2 per share, I believe this needs to take consideration of the next earnings, and will be the catalyst.
The markets currently pricing in a 11.5% growth rate for the next 5 years, putting the share price on track, which looks reasonable.
If you believe that purchasing bathrooms online will grow more than 11.5% over the next 5 years then this is a strong buy, but considering companies like eve sleep and purple bricks who tried the transition to pure online selling and failed then this is a speculative.
I believe the next earnings report will answer many questions, with a key focus on what they are doing with their cash and will they exceed growth targets. However, there growth strategy seems like its working, I'm sitting on a weak buy
Stock Ticker VICTORIAN PLUMBING GROUP PLC (XLON:VIC)
Current share price £0.83
52 week high £0.95
52 week low £0.33
Growth Rate (yrs 1 -5) 30%
Growth rate (yrs 6 - 10) 15%
Discount Rate 10%
Terminal Value (multiple of FCF) 12
Year 0 Free Cash Flow £14.00
Stock based compensation £3.90
Net Cash/(Net Debt) £35.50
Shares outstanding 325.2
Present Value of Future Cash Flows (Millions) $568
Intrinsic Value (Millions) $603
Intrinsic Value (per share) $2
Current Margin of Safety % 55%
Margin of safety
10% $1.67
20% $1.48
30% $1.30
40% $1.11
50% $0.93
Curious to know what you guys have for the intrinsic value as and what growth factors you've applied in your valuations.
I've applied a 46% 1-5 year growth rate.
My 5-10 year rate sits at 30%
Discount factor at 10%
Terminal Value (multiple of FCF) 15
Free cash flow at 115.6m
Stock based compensation at 1.5m
Net Cash/(Net Debt) 19m
Shares outstanding 32.9m
Present Value of Future Cash Flows (Millions) 21,684
Intrinsic Value (Millions) 21,703
Intrinsic Value (per share) 660
Current Margin of Safety 83%
I have a 50% margin of safety at a price tag of 329.84, so we're talking triple current share price, and 6 times for intrinsic value.
Let me know if your opinions on this
Not to sure on the relevance but ticker HLOGF (helium one global) up 25% today. Anyone got any ideas?
Taken from H1 report - Just to add some context
MARKET DYNAMICS
Both PGM supply and demand were disrupted during H1 2021. Anglo American Platinum’s second converter plant outage continued to impact supply during Q1, particularly rhodium, ruthenium and iridium, which have longer processing pipelines than platinum and palladium. Norilsk suspended operations at two underground mines due to flooding in March. Coupled with an incident at the Norilsk concentrator earlier this year, a supply reduction of approximately 700koz 4E is forecast for 2021 as a result. Both these supply disruptions provided support for PGM prices, particularly during Q1 2021. Record high rhodium prices of US$30,000/oz were seen in March, while ruthenium prices increased 196% from the start of the year, moving to a maximum price of US$800/oz during the period. Similarly, iridium prices increased 142%, starting the year at US$2,600/oz and peaking at US$6,300/oz for 6 weeks.
The ongoing global semiconductor chip shortage continues to impact negatively on auto production with Western Europe and North America equally the worst affected regions, followed by China. Despite the chip shortage beginning to ease as new supply comes online, the impact on global automotive supply expected to persist into Q1 2022. Original Equipment Manufacturers (OEMs) are attempting to mitigate the impacts by prioritising higher-margin models and omitting electronic functionality from vehicles where possible. Some continue to build vehicles, planning to install the missing chips once they become available. New and used car prices hit record highs in the US as demand far outweighs supply, and new car inventory dipped to as low as eight days for some OEMs during the period. In Europe, electric vehicle car registrations saw double-digit increases in Q1 2021, taking market share from diesel and gasoline. PGM prices responded accordingly and eased during Q2 2021. Despite the chip shortage, light vehicle production is expected at around 83.5m this year, 11.2m vehicles higher than a COVID-19 hit 2020, but not quite at 2019 levels of 86.5m vehicles. BEV market share is forecast at 5%. Easing of the global chip shortage end 2021/early 2022 is expected to result in a recovery of global auto production. Pent up demand for new vehicles, particularly in the US, remains strong and any ‘lost’ vehicle production is expected to be moved into 2022. Palladium and platinum industrial demand continues to recover following COVID-19 disruptions in 2020, and is forecast to be approximately 1-2% lower than 2019 levels. Although platinum jewellery demand is expected to recover somewhat from 2020 levels, net demand is unlikely to exceed 1.2 moz this year. Overall, we forecast 3E PGM to remain in deficit at the end of this year: Platinum is expected to be in surplus of around 750koz while Palladium remains in a 1moz deficit. The Rhodium market is expected to move into balance by year end. These forecasts support current
prices.
Lads, question - how would inflation affect the short to long term prospects of SLP?
page 81 of the annual report will answer this. Quote; 'The Group does not engage in any hedging transactions to manage interest rate risk. In conjunction with external advice, management
consideration is given on a regular basis to alternative financing structures with a view to optimising the Group’s funding structure. The Group
manages the risk by maintaining an appropriate mix between fixed and floating rate liquid funds'
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest
rates. The Group’s exposure to interest rate risk arises from cash balances, loans receivable and interest-bearing loans and borrowings, relating
to finance leases on motor vehicles and equipment.
Cash and cash equivalents are exposed to ZAR deposit rates.
Bull
Correlation between decline in share price & US annual growth as it hits 6.4%? Move between stocks and fixed assets maybe. idk, could be a reaction to the RNS, but decline took place close to the news coming out.
Bull
Goodluck tomorrow boys, we ride the ship
What we thinking on full year results? a potential profit? or loss with anticipated good news