Member Info for Ups1de

Plug in your own numbers …try 10% revenue;T3;op margin : 10.5;wacc:10%;capex 300m;d &a :140;tax rate 25%;cash 125m;debt exc leases 54….and see what you get .Relative value ie PE is only one valuation metric.

Good results but the market is forward looking. Greggs until recently was considered a strong growth stock. These results challenge that. Lfl sales have stalled & new openings slowed. It’s a relatively low profit company with op profit % under 10.It will need to reassure with strong lfls > 5% and openings >another 5% to justify its premium. A dcf analysis where growth doesn’t beat +10% Pa & op margin beat 10.5 pts (currently 9.7) would only value shares around £13…and that factoring in capex slowdown of £300million slowing markedly in a couple of years & contributing a couple of £ per share value. £18 per share is FULL.

Looks like a strong commodities rally underway. Slp set for a strong 2 nd half & impressive full year. However the strong PGM price action is set to propel next years results too. Just look at the net basket price trend. $140m+ Ebitda this year , $160m+ Ebitda next year ? If so with growing cash pile how can company be valued at net of cash PE under 3 ?

Halfway into Q3 basket it is clear weighted average revenue per Oz recovered is going to be dramatically up on last year & at least 15% up on Q2.
Also Q4 production will not be impacted from Covid shutdown, yielding an extra 8-10oz in final quarter. Expect price target revisions upward through £2 from analysts after Monday’s results. Even allowing for risks price under £1.40 looks a bargain. Back up the truck.

Have to watch too much excess cash held with currency risk.
Companies have 3 major finance decisions to make : where to invest ; how to finance ; and finally their dividend decision. Clearly SLP now have more than enough to run the business vs their expectations in the August 2020 corporate presentation. There are also tailwinds in demand, Q4 production recovery, PGM pricing & currency. I expect a decent but not excessive ‘ windfall ‘ payment. 5cents would be appropriate.

Any thoughts on what the price trend/closing price next Friday might be ? Personally I think we could test 120p

Even in the past month the Zar has strengthened another 5% vs $ so SLP cash pile should look very tidy when interim results come out on 23rd.
A fair chunk of special dividend will be courtesy of currency gains.

Based on various investment tools SLP has a long way to go .. Simply Wall St , Stockopedia, Vector vest average ~190. And that was before Platinum took off. Strongly endorsed by Investor Chronicle & Motley Fool. My own dcf suggests at least 200p.of course one has to factor in SAfrican risks. ( currency , Power, host mines). However it would be a good bet up to 150 IMO.. with Ups1de if PGM price bonanza holds. Remember Rhodium apart , most metals are at the base of a long bear market so good possibility of further increases. Good luck all !

PGM pricing on a tear...4th qtr Production recovery... cash pile converted into $ growing ... interims on 23rd which will show the powerful free cashflow .. and then Simon Thompson , Motley Fool, etc basking in their well deserved foresight. Full steam ahead !

Sadly one has to ignore any ‘ price going to the moon’ bolloks on micro .
It’s a turnaround that will take the full 3 year plan. There were some encouraging points in yesterday’s results webcast: strong free cashflow , reducing debt , clear restructuring /refocus actions BUT
Revenue is not growing ; margins were slightly down ;too many sectors underperforming.
I’m not surprised on reflection the share price gave some back today. If the team keep delivering & turn the tanker around shareholders ( buying in at the price or below ) will be well rewarded. I doubt the same will be true for those that bought over £8. It’s going to be a slog ... unless it’s taken out but the acquiring company shareholders would have a thing or two to say when every part of the business is still in ‘ recovery ‘ mode.

Probably more HP write downs to come , depressing profits. But as wise man said ‘ revenue is vanity, profits are illusory & cash is sanity.’Let’s see the cashflow statement Slowdown in R & D spending during Covid and serious wedge of D&A.Hopefully continued positive core business trend will also shine through. Will board prioritise debt reduction at this stage ? Divis can follow once the boat has been fully righted.

Slp now in the fortunate position of deciding what to do with excess cash.The Feb half year results will show how the cash pile has racked up again. PGM pricing has certainly created the opportunity for a ‘ decent windfall ‘ payment.A company has a duty to reward shareholders with the right dividend decision when cashflow merits it. The board did an excellent job buying back the obviously undervalued shares in 2020 but the time has come to reward the owners ( ie. shareholders ) differently. There appears little need for more than modest maintenance or expansion capex . Holding too much cash in a volatile (& risky ) Zar currency cannot suit £ sterling denominated shareholders. So its time to payout a good half year dividend now. Non executive directors / house broker do your job.

Also remember that Q4 last year was hit by the Covid shutdown. ( around 1/3rd of final quarter). This positive reversal & continued basket price momentum , now assisted with better Platinum spot pricing , should deliver $190m+Full year revenue comfortably. As we saw in Q2 update cash pile has been helped by the Zar:$ improvement & will grow strongly at half year. I reckon we could get ~$ 15m /4p a share as special dividend...yet our cash pile will still grow to fund future.

Liberum has raised price target from 140 to 200p. Latest update & interims should confirm tremendous financials. Super basket pricing outlook underpins everything positive just now.

Clearly more investors cottoning on to the strong profit ( & cash ) momentum of SLP. What we can look forward to ?
- confirmation that first 6 months Ebitda of this year will surpass all of last year.
-a bumper 3rd quarter even on modest production given the massive basket price rise especially rhodium
- 4th quarter post Covid production recovery with further acceleration of basket pricing given Platinum price recovery.
- growing cash pile ( mostly held in zar ) boosted by a 15%+ positive currency swing vs US $ last year
- positive outlook for basket pricing given China’s GDP growth & need for PGMs in new wave technology.
The party’s nowhere near over yet.

Can’t say I’m delighted about the dilution but folks buying in @13p looks a strong vote of confidence.
Does anyone know what the coupon on loan note was ?

PGM metals may be on a tear then you ADD copper ... Copper’s price has climbed 70% since March last year, and some of the decade’s biggest investment themes could be about to push demand much, much higher.

See, copper is essential to construction, machinery, transportation, and infrastructure – all sectors that should pick up as the vaccine gets economic growth back on track.

And even if the global recovery does stumble, no biggy: China’s economy is already firing on all cylinders again, and the country accounted for half of global copper consumption in 2019.

The metal is key to the green economy too: solar panels use up to six times more copper than fossil fuel plants, while electric vehicles use around four times more than gasoline cars.

And we’ve not even got onto the issues with supply yet…

Personally , I think people would be crazy to sell at these prices.
1.Take the macro picture first :
China manufacturing full steam ahead . This ( & technological advances ) is creating a natural resources bonanza particularly in PGM prices & demand
2.We should get a very encouraging 2nd quarter update given where the basket price has been. We should see this half year profits exceed last FULL year. That sets us up for the ‘ special dividend ‘
3. But of course investors should look ahead & when they factor in forward strong basket pricing ( more transparent everyday ),greater demand & better full year production as we lap the lockdown quarter we , hopefully, will see rising share price
4. Finally flawless balance sheet , no debt & rising cash balances tee SLP for a safer future than most.
No wonder the Stockopedia community voted it No 1 tip for 2021.

Hopefully ST will update in his column. Basket pricing clearly driving the great results ... and set to continue in Q2. Outstanding revenue growth, reduced operating costs , strong cash conversion & ballooning debt free balance sheet. Not ex divi till Friday so a 1.6p Divi tickler ( 2.2%) before a special Divi declared in early 2021. Still with a derisory PE & potential $120million Ebitda this fiscal. Ultimately the market is a weighing not voting machine so our day with price well above £1 will come. Well done SLP management team !

I guess after all the big talk from CE in his videos the city thinks a $4m order that probably delivers profit of ~$1m is hardly going to make a big dent in current valuation fundamentals ...with a PE over 100. Can Simply Wall st , Vectorvest & Stockopedia all be wrong in believing BVC way over valued.Its not like they think the share price is even close. We all believe the patents & interesting categories BATM is winning in will work to our advantage. Ultimately only time (& bigger test orders ) will tell. A lot of hype about 5G potential but do we have any $ estimates of what it might be worth longer term ?