Utilico Insights - Jacqueline Broers assesses why Vietnam could be the darling of Asia for investors. Watch the full video here.
I find it somewhat sad that I look at these results and filter them based on the current offer. I find it hard to believe that the net debt accurately reflects the current state, given the cash costs stated. When they are generating over $1000/oz in cash, they would have to be spending a heck of a lot not to overcome the relatively small debt position they had at the end of Q3. I am sure that it can be rationalised should the question be asked, I just don't think that it will ever be asked in an open forum.
Mrtibbles,
You don't need to believe the CEO, although I disagree when you suggest he says that there is nothing certain.
You don't have to believe the house broker when they say it is cheap, although I would suggest their valuation is low in a gold bull market.
You don't even have to believe the data which shows record production and cash generation.
But how about the bidder when he says the reason for the bid is the poor valuation of Shanta. Do you believe that? Is a 'poor valuation' + 6% a good valuation for Shanta at a time when it is just starting to materially throw off cash?
In my experience, the market assigns little value to things such as the VAT owed and even reduced value to cash - it is not unheard of to find a miner with a market cap not much greater than cash with the resources and mines thrown in for virtually free.
The key to unlocking the value here is the market sentiment. That could either be to the whole sector or to the company itself. I am expecting both to change over the coming years and I see this going considerably higher than 20p on the back of it. After all, it was almost that in October 2020 and the situation is a LOT better now.
Whilst not a particular fan of hedging for gold miners, in HUM's case the financial situation would make this a sensible thing to do even though there are some elements of the market that don't like it (as they prefer full exposure to the gold price). The fact that they are not hedging all of the output allows them some exposure but also ensures that they don't get into the situation where they can't deliver should they have an issue. As the year progresses, I suspect that they are more confident of their production profile.
They are usually pretty reliable with exploration news. In fact, with Eric in charge they have been pretty reliable full stop. I didn't think that he was the right person when he joined but you have to say that he has done a good job on the whole.
Struggling to see any gold miner on the London market that isn't undervalued to some extent. At least, those likely to survive!
I don't disagree. It is a lot less effective on small volume trading environments. But some concepts remain the same.
For large volumes it is quite useful and I find markets like gold to be very technically driven.
Whilst RSI > 70 is 'overbought', a share in a strong rally can remain overbought for some time. It was also stated earlier that retraces can be shallow or even flat in such an environment, which is true. In those conditions the RSI falls without the share price similarly falling. So don't depend on a strong retrace just because it is technically overbought.
I don't really trust gold price rises on the back of geopolitical events. They tend to be short lived. Money supply, debt, real interest rates, etc. on the other hand do influence sentiment in a more significant and longer lasting manner. Which is why, ultimately, I do see gold rising as these issues are insoluble in any orderly fashion.
HUM is a bit of a serial disappointer and I am not greatly impressed by the man at the top. However, if gold performs as I expect it to over the next few years then it will likely wash away the major problems and the share price will perform extremely well which is why I have been looking for the right entry point there (having missed the last big drop!). But Shanta is a more predictable investment currently.
I certainly don't see why it is an 'either/or'.
I am of the same opinion. Gold miners ultimately go up extremely rapidly, relentlessly and to the point that they are very overpriced. Difficult to get in at that point. But they do so on the back of a strongly rising gold price. Whether gold busts through $2k now I don't know. But it will at some point.
The rationale for share price appreciation is clear - debt almost gone, strong production, cash generation and exploration potential. But all of that is redundant if the sector is overlooked and gold miners have lagged gold's performance for some time. This is unlikely to be the case for ever but these price disconnects can last quite a while. The best way to address them is to keep on performing and using excess cash for dividends/buy backs.
But perhaps the best view on this is to be gained from those people selling. Why?
No reaction on Friday and I suspect that it will be muted owing to the fact that there are now no producing assets - back to being an explorer. Will definitely react on the Chinese deal but this is looking less likely as time passes and Chinese companies are unreliable in my experience on the market.
Today's news on the CEO 'resignation' seemed inevitable given the recnt events.