Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Bit of a debacle if you ask me
This is also my biggest loss which I've been in since starting investing properly 3 years ago. Now average 0.91p. Looking at the volume trend there has usually been a slow trickle dropping the price. Most of the shares are held tight. This share could recover very quickly.
Previous poster numbers are more conservative so I took them, but very broadly £375M revenue, 18% gross profit, 5% bad debt, £18M opex, tax at 19%, so (375*(1-(0.18-0.05))-18)*0.81 = £24.9M / 16.6 M shares = £1.50 EPS. My numbers are based on economies of scale improving gross profit and aggressive cutting of bad debt that was taken on through SOLR, which they said took time because they weren't given good data on new customers. As a result I think this is a blip and the bad debt will come back down. If bad debt were to increase to say 9% but they grew the same amount, EPS would still be 77p at those margins and they would still be undervalued. If I have numbers wrong let me know.
I have broadly the same expectations. However, EPS of 100p with an SP of 500p, gives a PE of 5, for a growing company, when the utility sector 3Y average PE is 25. I think the SP is tanking on missed (sky-high) expectations, and I think that BK shouldn't have thrown around £500M so much (even though it was clear that Yu weren't making it this year).
Yu Smart was never attempting to compete with SMS as a stand-alone offering afaik, it is part of the fully "1 subscription" model that Yu has been pioneering, going digital by default while providing all utilities. It should help to reduce overheads further while providing additional profit margin on existing accounts.
Yu has managed to control bad debt accounts exceptionally well, but the conservative provision is prudent. I didn't expect it to tank to 500 (or I would have bought here ...) so don't trust me on this, but I would be expecting it to stabilise at 450 - 500 and then recover slowly. For my fair valuation of Yu this is a speeding ticket. But as always DYOR.
I have been looking through the RNS to try to find anything that would justify the drop but can't find anything. The bad debt realised has increased to just over double last year while revenues have close to doubled, while they have taken on order books from SOLR and are now stripping out the bad debt customers. Already have almost £250M booked for this year. Think it must just be traders banking profits and moving them to some wobbly bank stocks or derisking generally, but can't see anything that justifies this move from a fundamental view.
Myles has been pretty clear that he has a short term and long term portfolio which he operates independently. His long term portfolio is holding in size in AVCT, and I believe his friends and family are in AVCT too. He has a much smaller short term trading portfolio that he has traded AVCT with in the past, where there have been short-term pricing discrepancies. I don't think Myles will have been able to, or wants to, trade a substantial portion of his LT PF as he will be ultimately shooting himself (and family) in the foot when he tries to buy back that quantity later.
OK, thanks for the thoughts. Just had a look at last year's results which said that SHG will be a +100k oz producer by early 2023, and to make that true Singida has to be operating at around 35k pa from the beginning (if not 33% higher if SHG want to hit 100k in calendar year 23). Still seems a compelling buy as this is a big value inflection point and the SP hasn't reacted at all to gold price or the increased production that is very close now.
It's been a long time coming for EH and while the results are great by comparison to other silver miners I am a bit disappointed in the UFO context. Only 1 drill successfully hitting ore is a bit odd, I wonder if they went too far out. Really need to see the drills on the 3D model that has been shown in other presentations before and after. Still, it helps to confirm that it wasn't just one great set of drills and we have more untapped scope. Further pointing to an extensive ore body is great. Hanc*ck seems to be chugging along too, just going through the gears right now. All good.
I have always said that I don't really care what the SP does but this now feels like a bit of a joke. This is no longer a matter of trust - the company are set to be producing 80 KT a month and be ramping towards that starting in Feb. You don't need to be a long-term investor to realise the value here in year timescales. This company is going to be a serious money printer inside H1. At this point, what does the market need to be finally convinced? The 2nd HWM in full production? Updated financial statement after it is running? There is even a brokers note with extremely conservative pricing that comes out at over triple the current SP. Still, it's just a matter of time now before the market realises, and I don't think it will be a long wait.
Have to agree with sirmark on that one, even if it turns out to be the correct play tomorrow I would steer clear of those sites and that style of investing (technical analysis AKA candle voodoo). They largely run on confirmation bias, if you stick to a strategy of trading when they tell you to, I expect you will find yourself out of pocket in the long run. People just believe that they work because they remember when they've followed it and won, rather than the times they ignored it and would have lost, or when they did lose. If you are basically taking the place of an algorithm in executing trades you can believe that there is an algorithm out there doing the same thing as you but better.
In any case, I have recently come to the realisation that the charts are actually a terrible thing to be looking at when investing, as this time-based share price data is worse than useless for value investors. All we need to know is that the current price is markedly less than what we think the share is worth. All the charts do is mess with your head - you will feel fear on a drop and overconfident on a rise based on the size and colour of the little candles. Timing your buys and sells based on the SP movement is only useful if your window is a few weeks or less - the sort of movements that value investors care about in the long term dwarf any fretting about a few fractions of a penny here or there if the value is as mismatched as you think it is. The SP is entertainment and a sense of validation but little else. Source: someone who watches the charts daily and knows nothing
Some positive movement and a retrace is common, just don't know when it will happen. Volume isn't huge today. Hopefully the market has heard that BEN are loading trucks to get to a different station when they don't have NS trains. Think we're still on track.
The day before the telegraph article (and now finding out that Myles has bought in today and yesterday) I was here questioning why it was so low, but opted to remain out until closer to the Singida release. Sod's law! Now it has broken 10.5 I expect good things.
@Hounddog10 - thanks for your comments. I agree with all of them and the stuff i didn't know fits into the picture I have for the company. The SP appears to be depressed for backward-looking reasons, not for the forward looking potential of the crown pillar, Singida and further assay results in other locations. The takeover interest was when the SP was near its resistance of 8.5p, just looking for cheap acquisitions. The SP isn't far off that now, although I suspect there will be sideways drift between 8.5 and 10.5p until perhaps late Feb when there is interest in Singida opening. By then I should have some funds available to dip a toe in here. ATB all
@Tornadotony
Thanks for your risk assessment - I had all those down as risks, but I couldn't justify any of them. The Singida development is on schedule and nearing completion, so is substantially derisked. The gold price has been suppressed by a strong dollar and the dollar appears to be weakening, and if it doesn't, many economies are going to be hurting from that alone. A Fed pivot is anticipated this year which should further drop the dollar. Luika has had a million man-hours without a time loss incident, and the outputs have not just been consistent, but have increased since they entered the crown pillar zone. They are now grading 9 - 10 g/t, double that of Q2 2022. The highest grade gold mines (which are very rare and small) in the world are operating at around 10 - 13 g/t. Debt appeared to be mostly drawn down to hit a dividend target which I didn't fully understand - maybe I misunderstood that. In any case it isn't huge compared to their cash flows. If these are the risks that people are factoring in I'm expecting that the stock is just completely overlooked and still depressed from the T/O bids. Will watch and consider coming in.