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Sotolo, totally agree with the others. As Feynzz points out you mention the lower PGM basket without mentioning the positive chrome price.
Then you say "costs are soaring" which is untrue. Like Moneyman64 mentioned, the Cost of Sales were higher than both he and I expected particularly the selling costs. But the main factor is the change in inventories of finished product and ore stockpiles, in H1/23 there was a cost of$14.649m which increased the COS( this reflects that THS has actually sold more than it produced and actually reduced stocks) , while in H1/22 there was a gain of $12.862m which reduced the COS, this is merely an accounting reconciliation and in the next half will be different again. Inflation in S Africa is similar to UK levels and the average USD/ZAR in H1/23 was 17.7 but is currently around 19.3 which will push local costs down when converted to USD. So costs are not scary.
Then you say "with luck second half profits down only a quarter", several of us have already said that NPAT in H2 will be higher not lower than H1 which you do not appear willing to accept, as offered before ,if you wish we can sensibly go through the numbers but please do not come out with these statements without being able to back them up. I am all for free speech and different opinions but you have to back up what you say.
Hi All,not sure if you have clocked it yet , the Grindrod Q1 performance was reported yesterday.
Despite the gain in vessel values, they reported a loss for Jan -March of $4.3 m of $0.22/share which means 83% us.
TCE for Handysize was only $9491/ day and for Supramax/Ultramax $12,869 which suggests their current break even needs around $9500/ day or more for the Handysize . Unfortunately the BHSI is still heading down compared to the end of March so we should expect further loses in Q2 unless things dramatically change.
TMIP is obviously performing better so let us hope this continues and rubs off on Grinxrod .
Moneyman64, the latest chrome price 40-42% CIF China is now up to $295-300/tonne and as you say should be helped by load shedding. Likewise I agree that with Vulcan the chrome recoveries is still only around 66% when the aim was for 70-80%, But this does take time and does appear to be gradually improving.
Alas I think the discount to NAV will continue until we have greater clarity on Karo. I make the PE for the full year at just 2.6
We all support each other on the numbers, like you pointing our my error on the estimated interim dividend. You might be right on a small Karo write off and some of the numbers were quickly valued in the accounts last year, but for me I think it is that people have not allowed for the PGM fair adjustment loss and quality and quantity adjustment losses as they do not really understand them, we will find out on Friday.
Hi Sotolo, sorry but you are wrong second half NPAT will be significantly higher than H1 so i am still expecting $120-130 m for the full year.
Even if the PGM basket price fell $100/oz and chrome $50/tonne from the current levels then H2 NPAT will still be higher than H1.
If you want to crunch the numbers together then let me know.
As for Karo there is plenty of time to go. But based on the current PGM basket it will still be profitable but not as profitable as we had hoped or the Tharisa S African operation.
PebeVEW
Hi Freedom4Uall, you are correct that in H1/2021 PBT was $104.592m and PAT $75.663 m with interim dividend 4.0 c.
But I respectfully disagree with you when you say that H1/2023 PBT and NPAT will not be lower than H1/2021.
The piece of the jigsaw that you are missing is that H1/2021 only 75.91% of the PAT of $75.663m went to owners of the company , the balance went to the BEE interests. But in 2022 THS converted effectively all of the BEE interest to shareholders so for the first time in H1/2023 effectively 100% of the PAT will be attributable to the shareholders .
So in H1/2021 total PAT was $75.663m , PAT attributable to shareholders was $57.439m ,basic EPS (which allows for the adjustment) was 21.4c and dividend 4.0 c. For H1/23 I expect PAT $57 m, PAT attributable to shareholders the same $57m , basic EPS 19 c, dividend 3-3.25 c (there are around 300 million shares now compared to 269m in H1/2021). This is only my opinion, I have been wrong before!
As Moneyman64 explained yesterday, H1/2022 was a rather special period including the one off Karo gain. But as you infer if EPS in H1/21 was 21.4 and dividend was 4c then if H1/2023 EPS is 19 then prorated should be around 3.5 c but with PGM prices falling and volumes down plus the investment in Karo I expect nearer 3c.
Hi Moneyman64, I agree that THS's stated policy is to pay minimum 15% of PAT as dividend over the year which would theoretically be nearer 2.85 c/ share but most companies tend to be conservative with the interims and then make the full adjustment after the full year.
I had totally forgot about the adjusted headline EPS in H1 last year and accept your point that in H1/2022 HEADINE eps was 15.5 when the basic earnings was 32.7 (adjusted for the $48.597m gain for acquisition of subsidiary. So I put my hands up and correct my H1/2023 expected dividend from 1.75- 2 to 3.0-3.25 c/share.. Apologies all for the confusion and worry. Hope I am right on the PAT and EPS. Just shows DYOR and 2 heads or more are better than one!
Sotolo, I think the full dividend for FY 2022 was 7 c(interim 3+ 4 final).
Sotolo, if production in H2 recovers as expected then based on current prices ,profit in H2 will be higher than H1.
Hopefully the full dividend for the year will be 4-5 cents/share. Don't forget profits in H1 last year included the one off gain from the Karo purchase of over$45 m and a favourable stock movement.
The H1 results will be out on Friday next week.
A bit of good news, the latest chrome price is $290-292/tonne , an increase of $2-5/tonne from the week before.
Freedom4Uall- I never expected AA Milne on this website!
Sotolo, from a different perspective the rhodium price is still higher than a month ago although I agree looks jittery. The last S African 40-42% chrome price was $285-290/tonne CIF China which was a $5/t increase on the week before and Chinese chrome stocks at main prts reported yesterday at 1.895 m tonnes a fall of 133,000 tonnes from the week before so in the short term I do not see a fall as you infer.
Sam, I am not really surprised the share price is not moving as there are lots of questions out there, specific to TMI and also the greater world picture . You might think the 0.67% rise in TMI last week was understated but the FTSE 100 was down 0.53%.
At a macroeconomic level there are still major questions on where the world economy is heading, this is currently reflected in the BDI and BHSI which seems to increase for a few weeks and then fall back for a few weeks, currently the BHSI is 663 which is exactly where it started this year but is considerably lower than 12 months ago.
Whether we like it or not, TMI operates in a highly cyclical and capital intensive industry and the current climate of high inflation and significantly higher interest rates asks serious questions particularly when TMI has bought the majority of Grindrod Shipping.
The shipping industry is facing a period of significant environmental change which asks further serious questions.
While the TMI NAV last week was up 5 cents/share at 172 cents/share which is a 34% discount to the current share price. Butin this value TMI is valuing their Grindrod shares at fair value, or effectively the price they paid for them. By Jan 2022 TMI had bought 26.6% of Grindrod at an average of $17.60/share and then in Dec increased this to 83.23% at $21/share, but today Grindrod shares are trading on Nasdaq/JSE at around $12/share so if you use $12/share to value the Grindrod shares owned by TMI then the TMI share price is trading at a small premium to NAV.
And we have to accept that TMI is a relatively new company and for the first 12-18 months was operating in a rising market and now we will see how if does when the market is under pressure.
For me, TMI is getting all of the big calls right particularly when to buy/sell vessels, when to commit to longer/shorter TC's and when choosing routes. So far the integration of Grindrod has started well and hopefully will continue. The 3.8% NAV total return announced last week for Jan-March when prorated works out at over 15%/year and for current conditions that is fantastic. Typically, Jan-March is the weakest quarter of the year.
TMI is like a good poker player, much is down to skill but they also need some good luck and as I have said before , TMI are in the top quartile of shipping companies but ultimately cannot totally buck the market. TMI has just got to plod away , making the right calls and their quarterly numbers will reflect this and the share price will gradually start to reflect this too.
Oufc, the report is largely 90% old stuff with 10% new stuff, but still worth knowing!
Sotolo, the good news is that the copper and nickel prices have both improved although the cobalt price has dropped a little so I now make the current base metal blended price about $16,880/tonne.
Freedom4Uall, for H1/2023 I am expecting chrome revenue of $182 m (787,900 tonnes averaging $247-15 as described below) , then Agency $15m (this reflects the big drop in third party chrome production and finally manufacturing $1.8m.
My total H1/2023 expected revenue is $321 m (PGM 122+ chrome 197+ Agency 15 +manufacturing 2).
So to answer your question, chrome on its own now represents 57% of total revenue, if you add in the Agency which is largely the 3rd party chrome then together they represent 61% of total revenue. So the chrome price rise has largely but not quite fully offset the PGM production and price decline (the actual H1 2022 total revenue was $334m as you pointed out below).
Sam/Krusty, while I had suggested the NAV would increase between 2 to 17 cents/share and expected nearer 17 , I don't mind putting my hands up and admit I got carried away with the asset increase and the RHS does understatingly comment "the more moderate increase in TMI's fleet value is a result of vessels becoming one year older" , so not all of the vessels have gone up as much, the contracted vessel sales of 3 further vessels will bring in $16.1m so presumably these are the oldest vessels.
Overall a really solid performance and ticks all of the boxes and answers all of the big questions. As you point out TMI has covered 24% of the fleet days for the full current financial year at an average net TC rate of $16,250/day which is a fantastic number considering where things have been over the last 3-6 months.
Freedom4Uall, the main reason your H1 2022 revenue does not work out is that you are not allowing for the processing costs to process the PGM out of the concentrates which Tharisa automatically takes out of the PGM revenue, I work on a processing recovery of about 79% but others think it is nearer 85%. See page 26 note 6 on revenue in the H1/2022 you can see the total PGM revenue is $194.979 M, in turn this is broken down into variable revenue based on initial results $185.163m (this is equivalent of the figures you mention of 91,800 ozs PGM X £2592/oz basket price less processing costs). Then there is a Quality adustment of - $13.776m (this means some PGM' were provisionally valued in the Sept 2021 accounts based on provisional assays but when the actual assays where known in the March 2022 accounts the actual assays were lower than the provisional and so have a lower value. Finally there is the Fair value adjustment which in the March 2022 accounts was a positive figure of +$23.592m ( this reflects the difference in timing beween when the PGM concentrates were despatched and initially provisionally assayed and when they were actually valued which is generally 2-4 months later once the actual contents are known. Another pedantic point is that you should use the PGM sales weight rather than the production but we can generally assume they are roughly the same.
And the main difference on the chrome is because you are using the chrome price of $175/tonne which is technically the price delivered CIF Chinese port but probably there is a small proportion of the chrome that is sold collected from Tharisa say at $75/tonne (then Tharisa does not have to pay the internal cost of transporting from the mine to the port in S Africa/Mozambique and then the sea freight cost to China/Indonesia. As a rule of thumb I deduct say $15/t off the chrome price and so use say $160/tonne rather than $175/tonne.
So for my H1/2023 PGM revenue I get $122m (variable revenue 77,000 ozs x $2214/oz basket price x 79%, then i expect a quality adjustment of say -$5m but it might be considerably higher with the excessive rain and oxidised ROF in this period, finally I have a negative fair value adjustment of -$8m reflecting the fall in the basket price over the 6 months.
hope it helps and open to comment from others!
Sam, I am pleasantly optimistic too. With a lower average time charter rate in Jan March compared to the quarter before I would have expected lower operating profits with the NAV increasing by about only 2 cents/share if vessel depreciation followed the long term pattern. But the information from EB at the end of March that the asset value of a 10 year old standard Handymax had increased to $18.5m compared to $16.5m at the beginning of January is a game changer and if reflected throughout the Taylor Maritime and Grindrod fleet I think the NAV would increase by over 17 cents/share to $1.84/+share. With the current share price at about $1.14/share the NAV would be at a minimum 37% discount to NAV and I would expect a moderate increase in the share price.
BHSI still going the right way.
I agree with oilbagger on the Tharisa twitter that " the execution risk of the Karo project is the main thing holding the share back".
As previously discussed on here the lower PGM basket price is seriously pressurising the IRR, fortunately we have seen a good bounce in the PGM basket price in the last week.
Although First Ore In Mill was scheduled for July 2024, in the production report last week , PP conservatively said it would be H1/2024 , so possibly up to 5 months later. PGM production will still be ramping up in FY 2025 as the 4 open pits are developed sequentially so it will not be until FY 2026 that production is up to about 194,000 ozs
Then, as lots of people gloss over, Tharisa owns only 59.5% of the Karo Platinum project. The Zim government has a free carry of 15% *(with the option for more but at the current basket price it is unlikely they will go for this), it would be good if Ilja can advise if this means they get 15% of the NPAT without any other liability or risk such as debt and interest (and not 15% of the contained annual PGM production which is worth considerably more) and that the other 25.5% owned by the Leto Settlement will work the same way at the previous BEE interests in the Tharisa mine.
Finally, for me the most important in the short term is the Phase 1 economics, based totally on open pit mining , initially in March last year and then updated in October last year this was based on an optimised mine plan averaging 3..0 grams/tonne of 6E but in the 2022 Mineral Resource and Mineral Statement published in October last year the declared reserve was only 2.31 g/tonne 6E. Tharisa had already started further tests (before when that Statement was published ) which they promised to publish in the current Quarter. Tharisa must be confident that the new figures will improve , hopefully in line with the indicated Zimplats 2017 3.44 g/tonne (before the Zim government took Karo off them in 2018). If the new declared reserve stays at 2.31 g/tonne 6E , for me this would totally kill the project based on he current stripping ratio and mine depth increasing the production costs by over 20% and reducing the LOM, if the new number is above 3.0 g/tonne then this will reduce the anticipated production cost. Even then we cannot hope for 3.0 g/tonne from day one and it could be a few years before the average gets up to 3.0. The production report last week did comment that mining would shortly start on 30,000 tonnes of ore would giving additional important information.
Fingers crossed!