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yes carats, based on the current development, my technical trajectory also points at 2.5 by xmas, but with a significant margin of error (+-25%) to both sides, since exact timing is a b**** here... However, given time, I continue to see a huge long term (2-3 years) potential all the way up to 10-15p, and only short term detractors (0-1 year)...
I just noticed, Petra has moved the announcement of preliminary results for the year ended 30 June 2021 to 14th September. Previously, it was expected to be on the 20th September. Anybody venture a guess for the key metrics?
Following this, the next milestone is when Petra announces Q1 FY 2021 Trading Update on the 26th October.
Yesterday, I got emotional, and bought 500k at 1.8 to see whether the sp moved up with me - it did! I know, it is NOT the smartest of moves to buy like that, but I have been waiting for the 1.8 level for so loong that I needed to touch it now that it is "within reach",-)
However, as before, it imediately moved back to the sub-1.75p level. But then it jumped back to the 1.8 level just after close of the open market.
This morning, I noticed another novelty. If you wanted to buy 2 million shares to-go, you had to pay 3p a piece!
However, I guess the supply-side will be riding in numbers shortly (writing this a little later, I can see we are back at yeaterdays levels again).
So, again, patience, patience, patience... (boooring,-)
If it could just conquer the 1.8 treshold and hold it until the FY21 report, so we can move on from there, I will be happy (for september results)!
I am also still trying to explain the sub2p level to myself sometimes (see previous posts for attempts). The tricky question is to estimate how good a deal the bondholders made buying out 91% of the equity for cancelling parts of the debt? Obviously, only time can really tell.
However, if the deal was “neutral” i.e. adding the same amount of value in cancelled debt as was subtracted in the substantial dilution of existing shares; then the enterprise value (debt+equity) should be a valid measure.
Another good reference, as mentioned by many here, is future free cashflow.
But either of these standard measures of value point to the conclusion that PDL should be worth 2-3 times as much right now.
SO, subtractors must be factored in. Here are three suggestions that come into mind:
The obvious one is former bondholders flooding the market with unloading their “risky shares” to get cash and balance their loan business balances. This will have a natural end, when they run out of shares to sell, and as I mentioned, more than 2 billion shares have already changed hands since the March conversion.
Number two, could be market bias and unequal distribution of information. As and when the company reports new results, it will erode this bias. We witnessed that after the lavest presentation 21. July, and I believe the FY21 this month and 22Q1 sales report in October will have a similar effect.
Finally (for now, you can continue this list yourselves ;-) a lot of large investors will not buy shares from a company with a ****ty credit rating. So, like Moodys said in their last report: PDL has a poor credit rating, but a positive outlook, but when the earnings get to at least 1.5 times the interest this barrier too will dissappear.
I obviously dont know, but my optimistic guess would be:
1p per share in dividend after the fy24 (of fy23 if we are lucky) results.
This would cost 100m gbp for all the 10b outstanding shares.
I guess this could be the case if we by then have a debt free balance sheet (or as good as), with 50% dividend rate (give or take 50% of that depending on annual circumstances) of a future net profit of around 200m gbp.
Agree, comparing PDL key ratios to the likes of Alrosa shows how undervalued Petra still is.
I just noticed, since the "re-birth" in March this year more than 2 billion shares have already changed hands. Some of them will be due to day-trading, but I believe quite a few have been unloaded by the former former bondholders, and into the hands of equity investors who are waiting for the turn-araound. The more we get this development going before the 3.4 level, the less of a shock it will be when we get there.
The basis analysis is obviously still the same: we need debt reduction to 1) regain a credible credit score 2) increase net profits by reducing interest payments and dependency on exceptional findings and 3) finally begin to release dividend payments. We are walking this path as we speak. Since the july 21 report, the monthly momentum (RMI) has been huge, but with still further room to grow. In 1-2 years we should have completely balanced the metrics, and then PDL key metrics and ratios will match its peers like Alrosa - even though it represents is a very large increase ! - and those of us who held on can celebrate.
Next milestone is 20th September with the FY21 report, then in October we get the 22Q1 sales report. Both of these should provide support and bring us a few good steps further.
Hi nb, the contribution of exceptional stones is mentioned in the trading update 21. July on the PDL website:
“ Financials:
FY 2021 revenue up 38% to US$406.9m (FY 2020: US$295.8m) driven by sales from Exceptional Stones (having a value of US$5m or more) contributing US$60.2m during the Year (FY 2020: US$14.9m); the highest annual contribution to revenues from the sale of Exceptional Stones
Post Period end, the Company sold the 39.34 carat exceptional Type IIb blue diamond recovered from the Cullinan Diamond Mine in April 2021 for US$40.2m”
Hi carats et al
It is a matter of perspektiver...
In my analysis, on a monthly basis, the share has been rising, since the share was “reborn” in March, when it hit rock bottom. April showed a minor rise, which in May/June consolidated, and then since July it has gone up...
As previously stated, I expect resistance at 1.8 for historical reasons (effectively it is at 1.77).
Therefore, there will be back and forth with minor temporary setbacks around here for a while, until the demand has taken over the supply.
I expect a minor (positive) technical turning point next week, but am prepared to wait for (good) news before we can move further upwards in a significant way...
A recent analysis read that the five largest shareholder hold more than 50%.
But also that active hedgefunds hold around 20%, they are expecting a turn-around soon.
What is required to enforce a compulsory buy-out? Is that a realistic risk?
Hi BCrader, my view is that we as shareholders took a crash landing due to being weighed down by excessive debt in March this year, holding our breath to see if we could manage it without breaking the wings. This, together with Covid, brought PDL down to a near-death experience.
It then takes some time to re-orientate itself, get the systems up and running (i.e. changed board-governance, manage financial discipline in the completely changed incentive structure of the new owners + maintaining operational excellence in a difficult environment), and fixing the problems that developed in the meantime (i.e. get the lost package through customs and clean the issues around the mothballed mine) to get ready. Next step is to gain cashflow momentum on the runway this year hopefully supported by market tailwinds, before we take off next year once the caveat from the credit rating agencies in their high towers give us a green light to go ,-)
We are now outside all the historically falling technical trendlines from years and months past... If the buyers clear the current resistance at 1.55 (saxo platform says currently only 10 mio shares for sale at that level), my next level is 1.8, and I see no technical reason for the market to pause before then... I would be very surprised, if we do not reach the analysis consensus target of 2,2 before this year is done - and even the big price of 3.4 is within reach...
Hi Nelson, agree that free cash flow rate is a key to higher share price.
But there might be a need for more keys, before the door opens...
As I remember it, the earnings/interest ratio needs to be at least 1.5 on a sustainable basis for Moodys to raise the credit level, which would enable PDL to earn an investment grade status. This makes sense, since it is important in the long run to earn more money than your basic cost level before we as shareholders can really benefit in terms of higher sp and dividend.
Now, if the sale of the blue diamond and other cashflow generating initiatives can help reduce debt, the future interest payments will be reduced, and we will be closer to success.
So, I really trust the old bond holders (current majority shareholders) to hold true to their stated interest of repaying the debts, thereby showing financial discipline, to increase market trust in PDL future results - and generate further demand for the PDL shares.
The sale of the big blue diamond is in July, and PDL close the books end of June, right? So, while it is a good story with positive impact on share price, the sale will not impact the results of this financial year. Too bad, since I guess it will fetch a good price (my guess is around 32m), giving PDL a great revenue boost!
My question is, will it impact the credit rating during 2021?
It looks like the great stones fetch a good price tag these days.
On this note, PDL just announced the sales proces for the big blue they found back in April. I am really looking forward to seeing this baby priced, which will happen on 12th July. PDL states today: "Sales process for the exceptional 39.34ct Type IIb blue diamond recovered from the Cullinan Diamond Mine. Petra Diamonds Limited announces the final sales process for the 39.34 carat exceptional Type IIb blue diamond recovered at the famed Cullinan Diamond Mine in South Africa. The tender on Petra’s online bidding platform is planned to close on or around Monday 12th July 2021". Some of this might already be priced in at the current share price levels, but it does not look like much so far...
Also, in July, we will get the full year trading update.
So, we see in the latest company presentation that the major shareholders as of 4th May 2021 are Vontobel (18%), Monarch (12%), Invesco (9%), BoA (8%) and Franklin Templeton (6%),. Together more than 50% equity ownership - what are their interests? what does that mean for the future sp development?
I guess, they are holding until the share price is equal or higher than their debt for equity swap ratio around 3,4p, unless they see substantially increased risk of degraded credit rating. However, the PDL credit rating currently has a positive outlook due to market development, cost control measures etc.
Opinions?
Correction: just redrew my chart more precisely, and I can see that the lines I mentioned do not cross until 3rd June.
Also, plan B, if the current short term bottom line at 1.45 does not hold next week, we might need to retest the long term bottom line at 1.27 once more before we can move freely upwards. That cross is around 4th of July.
Thereafter, nothing should hold us back ;-)
Hi Nelson,
from a technical perspective next week is an interesting one:
This week was one large doji star, which usually means that the market is coming to a turning point, and needs retesting of both directions to recalibrate itself... What is causing the stir?
Well, drawing a top line from mid December (when restructuring was approved) to mid March (when restructuring was completed), and a straight bottom line at 1.45 (current market minimum price), you will see they cross end of next week.
I interpret this, as the end of line for the restructuring max price control regime. If the price cannot move below 1.45 because of demand pressure, it will most likely move upwards to the next level of resistance at 1.8 once the lid is off - and upwards from there.
After that, I expect results will speak for themselves, and determine the future growth rate...
Disclaimer: Technical analysis is theory, and not worth its salt without business and market knowledge to interpret and validate the hypotheses.
However, in this case, I think we are seeing signs that give me reason to hope.
I will hold and see if the market behaves according to my expectations,-)
Have a nice weekend everyone!
The reopening of the Williamson mine is said to require working capital of about 20M USD, but it is better than an maintaining an expensive hole in the ground. Furthermore, this three months exercise might be financed through resolving the issues with the Tanzanian government about VAT and the parcel with diamonds, as expected this quarter. The article sheds light on the "unsold parcel of diamonds issue". Here, it seems the goverment claimed the diamonds had a value of 30 M USD, whereas they were declared to be worth 15 M USD. I guess it should be a relatively simple exercise to agree on the value, pay the taxes required, and move forward... with a change in government there might now be a will to find solutions on both sides...
I find it safe to assume that these plans will significantly increase revenue and sales next year, once Williamson is up and running again...
Link: https://www.miningmx.com/news/diamonds/45944-petra-gives-mind-to-williamson-reopening-after-diamond-prices-restore-business-case/