Sylvania Platinum Share Discussion Threads

[1jbrisky] 01/5/2020 19:53

Mr Stephens, I'm with you, incredible 3rd Q results & 3 down days since.
To my mind SLP has always been, to a greater or lesser degree, undervalued but the market has taken that to a new level this week.
All kinds of mitigating circumstances given for the underperformance but they have to be in the price at these levels.
I'm fairly sure a ST piece will give us a nudge early next week and then I'm hoping for a definitive dividend policy announcement with the year end results.
Assuming no further covid related dramas we can afford 10p or close to 25% of today's share price on a regular basis, should get the herd's attention and put us where we ought to be.
Share buybacks clearly aren't doing the job, SLP needs a regular dividend.

[mr stephens] 01/5/2020 11:31

Help me to understand how is “the chart looking good” but the share price is tumbling? I need help just don’t get it
Market cap is almost 50% covered by cash
P/E ratio just with current profits To date is just over 2
I’m truly lost

[mr stephens] 01/5/2020 09:33

Shares in circulation now 272m down from 288m

[epicsurf] 01/5/2020 08:00

1 May 2020

 

Sylvania Platinum Limited advises that as at 30 April 2020, it has acquired 137,971 Ordinary Shares, representing approximately 0.05% of the Company's issued share capital, at Aus$0.9195 per Ordinary Share. This relates to the buyback of up to 1,650,339 ordinary shares of USD0.01 ("Ordinary Shares") from all certificated non-UK shareholders who hold 175,000 shares or fewer in the Company ("the Plan"), as advised in the Company's interim financial results on 17 February 2020.  The shares will be placed into Treasury. To date, a total of 436,603 Ordinary Shares have been bought back under the Plan.  

[fsawatcher] 01/5/2020 07:24

chart lookin good after a pause

that 67p high needs testing again

[dangersimpson2] 30/4/2020 16:24

Company hasn't given guidance for FY21. I've based it on similar plant feed to FY20 but 5-10% lower head grade due to a greater proportion of historical arisings to fresh arisings. Plant feed to PGM plant feed ratio has decreased over time for this reason so I don't see this shifting, but is just a guess without company guidance which won't come until FY20 YE at the earliest.

If they can significantly increase the plant feed rate or improve recovery then this may prove conservative, but previous guidance had recovery reducing over time to improve payability of the concentrate. Q3 increase I think was an anomaly related to temporarily shutting the plant down for lockdown.

[plat hunter] 30/4/2020 14:52

Covid shut down equalls lost production

[dilip40] 30/4/2020 14:40

why is 2021 guidance on 60k compared to 68k for y/e 6/2020

[basem1] 30/4/2020 13:35

It was the chart playing out yesterday SLP is pretty good to trade from a chart perspective. We had got a bit overbought and came back to 3 support levels It's a buy again now though

[risa5] 30/4/2020 13:11

Mr Stephens,

I did have some doubt about the contents of the article and the negative attitude of the author but thought it may explain why there was a 5% drop in the price yesterday and that article may be the cause of it.

[dangersimpson2] 30/4/2020 10:51

Happy to be proved wrong, but would be good to know where you see the undue pessimism for Q4.

The company is guiding 68koz 4E for FY, which with 60koz delivered Q1-3 is 8koz Q4. There would be another 2.7koz byproducts, based on historical 25% ratio.

Today's spot is off about 15% in ZAR vs Q3 average so gross basket would be about 28.8k, giving 4E revenue of ZAR158m and byproducts ZAR10.3m. Sales adjustments may come in around -ZAR40m based on a typical impact of a 15% move in the underlying on Q3 20koz production - but this is very much guesswork here. So Net Revenue ZAR128m.

Using the Q3 Operating costs/plant feed of 0.29 ZARk/T this would be ZAR70m of operating costs - note this is probably very optimistic - it assumes no economies of scale from running higher plant feed rates. G&A is running ZAR8.6m per quarter, which then gives ZAR50m EBITDA or $2.8m at 18ZAR/$.

FCF is probably about $1m on that EBITDA.

The other big unknown is how much of the working capital flows reverse, but given that the cannot get concentrate refined at the moment and are stockpiling it then a big reversal may be a brave call. Likewise earnings of $4-6m, it requires a production beyond current guidance or PGM pricing significantly above current levels.

One thing I agree on is that they should be returning capital via dividends despite the weak Q4.

No company should be valued on a single quarter, so the company shouldn't sell-off on a weak Q4 just as a strong Q3 shouldn't cause a meteoric rise. The market should look forward to FY21 and beyond. If PGM pricing remains at the current levels and they can maintain production at around 60koz or above this is still looking reasonable value, just not as good as it was in the recent past.

[mr stephens] 30/4/2020 10:04

Thank you Risa really interesting read but out of date This was prepared after the 1st half results and foes not reflect the latest q3 update.The author quotes the cash balance at $33m it is now well over $40m Now to Dangers post. Very downside. Realistically they will make about $4-6m profit in q4 which will bring them over the $50m for the year.There is also $9m trade debtors plus there is always a percentage if delayed invoicing so that is cash to add on the balance sheet which means cash will be between $50m and $60m. There is an issue with zar dollar exchange rate as cash held mainly in Zar so needs to be discounted by around 10%.Liberium have said there will be a special dividend. Assume it’s around 10p. That’s the minimum upside to the share price

[risa5] 29/4/2020 18:20

What Is Sylvania Platinum's (LON:SLP) P/E Ratio After Its Share Price Rocketed?

Sylvania Platinum (LON:SLP) shares have had a really impressive month, gaining 31%, after some slippage. That brought the twelve month gain to a very sharp 55%.

Assuming no other changes, a sharply higher share price makes a stock less attractive to potential buyers. In the long term, share prices tend to follow earnings per share, but in the short term prices bounce around in response to short term factors (which are not always obvious).

The implication here is that deep value investors might steer clear when expectations of a company are too high. Perhaps the simplest way to get a read on investors' expectations of a business is to look at its Price to Earnings Ratio (PE Ratio).

A high P/E ratio means that investors have a high expectation about future growth, while a low P/E ratio means they have low expectations about future growth.

See our latest analysis for Sylvania Platinum

Does Sylvania Platinum Have A Relatively High Or Low P/E For Its Industry?

Sylvania Platinum's P/E of 4.76 indicates relatively low sentiment towards the stock. If you look at the image below, you can see Sylvania Platinum has a lower P/E than the average (7.4) in the metals and mining industry classification.

Sylvania Platinum's P/E tells us that market participants think it will not fare as well as its peers in the same industry. While current expectations are low, the stock could be undervalued if the situation is better than the market assumes. It is arguably worth checking if insiders are buying shares, because that might imply they believe the stock is undervalued.

How Growth Rates Impact P/E Ratios

P/E ratios primarily reflect market expectations around earnings growth rates. Earnings growth means that in the future the 'E' will be higher. And in that case, the P/E ratio itself will drop rather quickly. Then, a lower P/E should attract more buyers, pushing the share price up.

Sylvania Platinum's earnings made like a rocket, taking off 182% last year. The cherry on top is that the five year growth rate was an impressive 65% per year. With that kind of growth rate we would generally expect a high P/E ratio.

Remember: P/E Ratios Don't Consider The Balance Sheet

Don't forget that the P/E ratio considers market capitalization. Thus, the metric does not reflect cash or debt held by the company. Theoretically, a business can improve its earnings (and produce a lower P/E in the future) by investing in growth. That means taking on debt (or spending its cash).
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.

How Does Sylvania Platinum's Debt Impact Its P/E Ratio?

Sylvania Platinum has net cash of US$34m. This is fairly high at 21% of its market capitalization. That might mean balance sheet strength is important to the business, but should also help push the P/E a bit higher than it would otherwise be.

The Verdict On Sylvania Platinum's P/E Ratio

Sylvania Platinum's P/E is 4.8 which is below average (14.0) in the GB market. Not only should the net cash position reduce risk, but the recent growth has been impressive. The below average P/E ratio suggests that market participants don't believe the strong growth will continue. What we know for sure is that investors are becoming less uncomfortable about Sylvania Platinum's prospects, since they have pushed its P/E ratio from 3.6 to 4.8 over the last month.

For those who like to invest in turnarounds, that might mean it's time to put the stock on a watchlist, or research it. But others might consider the opportunity to have passed.

[dangersimpson2] 28/4/2020 23:10

With the guidance of 68koz, this means Q4 will see production of around 8koz, combined with the reduced PGM prices, EBITDA for Q4 should be about $3m, taking into account the likely impact of negative sales adjustments on lower pricing. Quite a step down from Q3 but not unexpected given the shutdown. Q4 should be cashflow neutral assuming refining restarts and they can sell the concentrate by then. I'm not sure grasvally will complete in the current market so a cash balance of around $45m at year-end would be mid-case. If working capital flows reduce due to reduced production then this could increase, again if refining pipelines are normalised. Same if the Rand strengthens against the dollar, (although this may negatively impact EBITDA).

Looking forward to FY21 then similar plant feed on the slightly lower grade from an increased percentage of historical arisings probably gives around 60koz production, which would be around $35m EBITDA at current PGM pricing. The biggest risk to this outcome is probably an extended global recession where car production remains subdued and reduces PGM pricing.

This then is a forward EV/EBITDA of around 3.5. Not as stand out value as it was at these levels prior to Covid19, when it was on a sub 1 forward EV/EBITDA for a while but then there are a lot of companies in much worse shape at the moment.

[stemis] 28/4/2020 19:00

plus cash?

Enterprise value = Market value - cash

I guess we'll see another leg up here when they announce resumption of production...

[basem1] 28/4/2020 17:14

2 pound coins being sold for 50p and change here

[devonlad] 28/4/2020 16:22

plus cash?

[stemis] 28/4/2020 15:36

Current enterprise value at 46p = $113m

Earnings at Q3 with one quarter to go = $49m

Mmmm...

[jm65] 28/4/2020 12:45

Yes I do...am I wasting my money?

[maxplus2] 28/4/2020 12:29

Thank you. It's doesn't work. It only works after 4.30pm. Do you have a subscription with ADVFN?

[jm65] 28/4/2020 11:22

Ah, sorry, I was looking at the trades going through on ADVFN

[maxplus2] 28/4/2020 11:14

Where do you get this info From? Trade info in ADVFN doesn't work. LSE info is delayed and they don't display the info

[jm65] 28/4/2020 11:01

200,000 Buy just gone through.

[dangersimpson2] 28/4/2020 10:45

$32m EBITDA for a single quarter, despite the lockdown impacting the end of the quarter, is an absolutely phenomenal performance.

Challenges going forward, but the great cash flow generation of the last year puts them on a very solid footing to tackle these in their usual pragmatic manner.

[devonlad] 28/4/2020 10:23

Whatever way you look at it, this is a well run business on a a ridiculously low rating. There are risks here as always but given the value that peers trade on, this is still a strong by and my number 1 holding. Mr market will catch up eventually.