Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Although revenue shows good increases, there is little left over once we come to net profits, or free cash flow. The shareholder returns, such as ROE or ROIC, as well as the operating margins, are in double-digit negative territory.
It is important that a company demonstrates it can return value to shareholders.
Growth by aquisition is a dubious strategy since integration and the amortisation of the purchase price can take years to complete. Is it really best use of funds?
The jury is still out, but there needs to be substantial improvement on the fundamentals should even current valuations remain justified.
Velo,
Nothing wrong with 'trading around a position'. There is always some 'play money' for these sort of things. The percentages are up to you, but I see what you are trying to do.
I am not sure I fully grasp the patterns of SLPs movements. But if you do, there is no harm in trying it out.
Best
...yup. Additionally, there is no clear path as to how decarbonise transport either. EV's have a huge issue with recycling the batteries, and hydrogen requires substantial infrastructure and may not necessarily be green either.
We might need to go along with CBEs for a little longer than anticipated...
Hi Velo,
Indeed, markets aren't efficient. That's great for us. It always makes me smirk when investors become upset when prices (on great businesses) drop. Maybe it's because they never worked out their estimated fair value? Who knows.
If we were to apply the same principle, then the customary January sales the retail sector holds each year, would be one of the scariest and darkest events a western household faces. Suicide rates would be on the up and the world ends every year just after Xmas.
We all know this is absurd, but then why is it not equally absurd when the same happens with securities? Makes no sense to me and I love these pullbacks.
The stock market is the only market whose buyers complain when prices go down.
If I could let the dogs out, it do it every month, just before pay day.
Woof!
Hi nimrod,
Indeed. It looks like 16% pullbacks before new heights are a familiar pattern with this one... Still, I remain LTH on this one, rather than trade it.
Now here's a brilliant opportunity to back up the truck again....
Hi Shanny80,
Many thanks for sharing your thoughts re risks. Indeed, some rather good points in there. You are aware that they process tailings and thus have a different risk profile as to a 'regular' mining company?
As far as future growth is concerned, capital projects such as commissioning of optimisation projects (plant and equipment improvements -- that might cover de-carbonisation projects in the future), as well as mineral asset development and opencast mining projects (those can take up to 5 years to come online). The CEO's review in the latest AR elaborates on these.
As far as going carbon-neutral is concerned, I am skeptical about current plans worldwide. Hydrogen production is not carbon-netural, and energy generation from all renewables by the proposed cut-off dates sounds rather optimistic. We also don't have enough platinum to convert all cars to fuel cells, and the need for faster refueling and a more robust power solution for commercial (and private) transport is still not clear, nor do we see clear plans and funding to provide infrastructure.
Although I applaud cleaner environments, SME's will tell you that 4/5th of the world's CO2 is absorbed by the oceans whose lifestock has been severely reduced since the 1970s as well as it's ecosystem damaged. These figures coincide with the sharp raise in CO2 levels on the planet.
I am not an ecologist, but the point I am trying to make here is that the path forward is anything but clear, neither is it established. It could be subject to rather unforeseen disruption.
Maybe that's what the market is telling us with this ridiculous valuation?
Oh this terrible forum software where ads interfere with the typing on mobile devices....
I meant to point out that research from Liberum is not independent research, since it's their broker.
This doesn't discount what they release, it's worth to be aware though.
Most research isn't independent anyways....
The analyst from Liberum (it'levelstindependent analysis fyi), mentioned that the current price still assumes rhodium and $5000 levels.
TBH, at £2 this in would still be at a substantial discount to fair value (by that I mean at least 50%).
Slater and Graham would have had a field day with this one....
If charts would be able to predict the future reliably (think about that), then today's wealth distribution would look very different. They draw on past behaviour and probabilities from observed outcomes, but you may never be 100% sure. So I'm not a huge fan of them.
Looking at SLP's valuation, you can look at an earlier an earlier post from Sirius, where all the workings for his DCF model are shown. Effectively, it is priced as if growth was negative. One can deduct with a reasonable amount of confidence that there is safety of principal investing in SLP, even at these levels.
Going a bit further, a consensus emerges that 200p is a very reasonable prediction of where future price is headed in the rather near future. It really doesn't matter much whether one takes a position at 120, 130, 140 or even 150p---the gains from these levels all beat the market comfortably.
That's the kind of security which I overweigh heavily.
It doesn't come up often.