Sylvania Platinum Share Discussion Threads

[farrugia] 09/7/2021 11:41

if its such great value why have directors been dumping shares all throughout 2020 at about 50p to 55p?

[greggphilips88] 09/7/2021 10:14

Tharisa provided their latest quarterly update today.
Strong chrome prices mentioned, which does SLP no harm in terms of host mine - (although I think SLP is more complex due to Samancor's fixed price deal with its Chinese partners. I'm not sure the relationship between chrome price and output for Samancor - but the SLP annual reports certainly infer there is still a relationship between the two for its host mines)
Here are some key bits (remember, SLP basket price is much higher due to it's prill split)

"THS Market Update

-- Tharisa's PGM basket price was 15.6% higher quarter on quarter (Q3 2021 vs Q2 2021) and remains above US$3 000/oz at the time of writing, despite the recent decline in the rhodium price, highlighting the unique prill split benefits. The use of PGMs in the hydrogen economy has not been fully recognised as the market is focused on the premature decline of the internal combustion engine. PGMs play a vital role not only in emission control in traditional drive engines but a major role in hydrogen fuel cells, the greening of the economy and PGMs continue to be a critical component of the changing drive train make-up. We remain confident that the unique and flexible PGM metal properties will have a robust outlook, being evident in the demand for the precious metals in a number of growing diversified industries, while PGM production increases across the industry remain limited, therefore supporting stronger long-term prices.

-- Higher chrome ore prices were achieved in the quarter despite subdued demand owing to a reduction of ferrochrome production in China, caused by electricity control measures. Stainless steel producers are operating at historic high levels, creating robust demand for ferrochrome, resulting in tightness of supply and consequently increasing the price of ferrochrome at the end of the quarter, which bodes well for the current and future chrome ore price.*

The fall in Rh hasn't been fun, but not surprising as supply side picked up following earlier disruption with Nornickel and the AP smelters, and the fall in demand from the auto industry due to chip shortage impacts and June decline in Chinese car sales.

However, it's worth considering what the basket price was in July 2020. We start this year at a much higher level, which certainly helps with YOY comparisons, given Q3-Q4 are unlikely to reach the same $5000 level next year.

Q4 will be very strong - out later in July? (27/7 last year).

I've modelled on much lower basket than current (Pt 1000, Pd 2600, Rh $12000) and the numbers still justify a higher share price than 120p, even ignoring the increased cash pile. Has anyone else produced a different view?

Hopefully August starts to see the share price climb back above 140p, if we see a broker update, ST tip update, and (hopefully) strong Q4 results. DYOR.
GLA.

[forthelongterm] 02/7/2021 15:32

Interesting article - gives an insight into the place hydrogen and PGMs will have in the future energy world

[dougmachin] 02/7/2021 14:49

I missed the share buybacks. That's 173K's worth. At average of 128p.

Again, should easily be at 128-130p right now and that's just the starting point.

With upside to 200p from Liberum's April share price target.

Momentum Investor had this as a buy at 115p and 125p too.

Great day to buy today IMO!

[dougmachin] 02/7/2021 13:55

Worth reading this (again) from May 4th 2021 'IC' with share price @ 125p:



In summary:

"I am raising my target price from 180p to 200p to value Sylvania on a 2021/22 cash-adjusted PE ratio of 4. Investors should note that having paid a 3.75p a share dividend last month, Liberum expect the board to declare a further dividend of 4.85p a share at the full-year results, implying the shares offer a 6.9 per cent prospective dividend yield. Strong buy."

[dougmachin] 02/7/2021 12:14

MMs were short of stock today IMO, certainly a scramble to buy at 115-116p.

My buy's showing up as a sell too.

Good volume with SLP over the past few weeks too, I think.

Lots of buying higher than here.

And lots of profit takers taking profit / weak holders getting shaken out.

My view from the chart, is at 140p+ the share price got ahead of itself.

Fit a curve model through the share price from early 2019, puts the share price for now at about 130p.

A linear model from early 2020, puts the share price at about 130p for now too.

That'll do me if we can get back to there in short order and then reassess from there.

[rabiddog] 02/7/2021 10:54

I’ve had another nibble as well…starting to get over exposed. Hope that isn’t a descending triangle forming!

[dougmachin] 02/7/2021 10:38

Yep, in for some more just now.

Couldn't get any electronic stock for about 20 mins.

Looking forward to having timed the bounce to perfection... come on!

Cheers

[johnrxx99] 02/7/2021 09:20

Some buys showing as sells. Adjustable spread.

[greggphilips88] 01/7/2021 11:13

Pratt2 - I have certainly kept adding at these prices. I've laid out in recent, previous posts why. I continue to be bullish on SLP. I hope that July and August may see a bit of a re-rate in the SP, both to new all time highs and a new ongoing support level.

We have much of the data to compute SLPs Q4 and full year results. The maths looks very good.

Longer term, PGM prices have underlying drivers for the next few years.
The automotive industry has had to cut back on production due to the chip shortages.
"The ongoing semiconductor chip shortage is expected to cost the global automotive industry $110 billion in revenue in 2021, according to consulting firm AlixPartners."

What will happen to PGM prices when it has to make up that lost output?
Time will tell.

[pratt2] 01/7/2021 10:08

This has been going downhill for a while now, buying opportunity in my view. The opportunity still seems immense here IMO, any other views here?

[greggphilips88] 27/6/2021 14:41

Kennyp52 - agree. SLP briefly reached 150p a few weeks ago. When we see Q4 and full year results, new broker update, and a ST update, I could see it motoring beyond that, and maintaining well above the current price.

Cliffardo - agree. I've listed Q3 vs Q4 prices previously (5549). To your point, see table below showing FY2020 prices vs this FY2021 average prices. Pt is up 19% comparing this full financial year to previous, Ru up 42%.
All PGMs are higher now than the FY2021 average. If prices were to stay exactly the same as now, for the next 12 months, the basket price for the next financial year would be higher than this financial year. If you think there is potential upside to current prices (e.g. once car production starts to catch up after the chip shortage, ongoing structural market deficits), then next year could be even better. If you think PGM prices will fall, then profits may come down (other things being equal).

METAL 6E % FY2020 FY2021 $ VAR % VAR PRICE NOW
Pt 47.0% 879 1050 171 19% 1113
Pd 17.0% 1922 2440 518 27% 2657
Rh 9.0% 7070 18718 11648 165% 19250
Au 0.2% 1500 1800 300 20% 1780 (rough estimates as negligible)
Ir 5.0% 1512 3434 1922 127% 5900
Ru 21.0% 255 362 107 42% 750
(JM prices - SLP use S&P Platts)

Finally, there is definitely some upside potential on production. SLP website (on Strategy page) actually talks to 76k - 78k oz steady state production (host mine supply dependant), and previous pre-COVID forecast had been 73k - 76k oz. 3k - 4k oz * $4000 basket price is a nice buffer / addition to earnings even if some PGMs were to drift a bit lower. 6E production is obviously higher still.

Clearly, big reductions in PGM prices would reduce the appeal here, and those are possible, but we are not in that territory yet, even with recent falls from All Time Highs.

[cliffardo] 27/6/2021 12:33

Hi Greg,
Been invested in SLP since early 2019.
Rhodium has been spoken about a lot but I would like to highlight platinum and ruthenium.
Pt is worth about 47% and Ru about 21% of our 6e split by production not income,I believe and Pt is up about 10/15% and Ru has more than doubled since jan 2021. Rh at around $20k is up 25% since jan.
Unless there are any unforeseen issues Q4 and full year results will be big?

[kennyp52] 26/6/2021 17:24

Hit my 132p target on this and sold but missed out on 140p and here we are down to 121p and ability to have bought sub 120p earlier in the week . Still maintain this has very solid fundamentals with steady management. Going to be very tempted to re-enter with JLP rising significantly .. will this follow ? Either way a good share imho and unlike many miners provides a dividend . Good luck

[sr40] 25/6/2021 23:40

It is striking to read back a few years at the some of the posts on SLP wherein talk of a Rh price of $5k or $8k was treated as being out-of-this-world. Now look where we are (around $19,500) Still massive by relative terms.
If this settles at 15k, this is still huge!
SR40

[sr40] 25/6/2021 23:30

Thanks Chaps - Yes indeed at the revised split - 4E - for the month of March, the number is 4,727 which is not far away.
gregg - it is quite a tricky calc adjustment to arrive at the 6E to 4E conversion. I see you took 26.2/73.2 and * by 9% to get the 3.3% uplift (for Rh). That`s pretty sophisticated, hat tip there. Thanks, I see that now.
Great stuff
Met, FF - noted - guys thanks one and all - learning so much in this company. Feel like an amateur amongst pros tbh.
SR 40

[freddie ferret] 25/6/2021 23:18

I think demand and supply will restablish itself once the chinese have flushed out the speculators.

We are told that Rh is in deficit ie more consumptive buyers than sellers.
The question of price elasticity of demand does raise its ugly head however we have been up close to $30k and I see no reason why this should not be so once again. Infact I think the bounce will be rapid once it gets going and speculative positions if they existed have been unwound.

[greggphilips88] 25/6/2021 22:30

SR40 -
I can't say for sure, but here are a few things to consider:
1) the prill split % you show is for 6E, not 4E. (6E prill split is Pt 47%, Pd 17%, Rh 9%, Au 0.2%, Ru 21%, Ir 5%)

So I think you need to multiply them up to get just the 4E split, so:
Rh 12.3%
Pt 64.2%
Pd 23.2%
Au 0.3%

2) SLP don't use JM, they us S&P Platts - prices differ a bit

3) The wording used was:
"1 The gross basket price (4E) in the table is the March 2021 gross basket used for revenue recognition of ounces delivered in Q3, before penalties/smelting costs and applying the contractual payability."
- so I'm thinking they calculated this based on March prices, not Jan/Feb/Mar prices (but I'm not sure on this).
Perhaps using these changes would get you in the same area as SLP.

FF - yes, good to see Rh stabilising for a couple of days, and Pt and Pd recovering a bit. I'd be happy if prices stayed at these levels for the next 12 months.

[freddie ferret] 25/6/2021 21:35

Some signs that metal prices have at least stabilised. Pt and Pd are rising.

[metis20] 25/6/2021 20:27

SR40 - maybe SLP are getting a much better price for their Rhodium than the JMAT bid price. Apparently prices for Rhodium are agreed between buyer and seller, whereas the prices paid for Pt and Pd are aligned closely to the daily spot prices.

Using Kitco bid prices my 4E gross basket Q3 price comes out at $3786. (Using JMAT you have $3075.)




The 6E figure stated in the Q3 results was $4573 - 1.2 times my $3786.

The 6E figure stated in the Q2 results was $3323 - 1.2 times my $2776 for 4E gross basket price for Q2 using Kitco.

It will be interesting to see if the corresponding figures for Q4 also differ by a factor of around 1.2

fwiw my daily average 4E gross basket price to date for Q4 is $4413 using Kitco bid prices

So my 4E gross basket prices for Q2, Q3, Q4 to date are $2276, $3786, $4413

[sr40] 25/6/2021 15:22

Any ideas how SLP get a 4E gross basket for March Q320 of $4,576? Presumably the 6E basket was even high?!
When I input the Pt, Pd, Au and Rh PGMs through the JMAT price calc: hxxp://www.platinum.matthey.com/prices/price-charts
any combo of dates I don`t get anywhere near. So e.g. the corresponding quarter dates of: 1/1/21 to 31/3/21 = 3,075. No where near. (I assumed 1800 for Au tbh it is not material). Any inputs before these dates fall well short because Rh wasn't anywhere near its 2021 highs.
April (only) gives $3,639
The split is as per the report: Rh 9%,Pt 47%, Pd 17%, Au 0.2%
Any help on this appreciated.
SR40

[2vdm] 23/6/2021 07:54

Thanks carcosa and SR40. Really interesting and helpful

[greggphilips88] 21/6/2021 12:12

Good discussion both - thanks.
SR40 - I'll be very disappointed if production is only 16.2k oz for 70k oz annual. I think 72k oz fairly safe bet, with good chance of up to 73k oz, Outside chance could even surprise up to 74k oz. 70k oz is nice conservative estimate though, meeting SLP's updated COVID impacted guidance, and safe conservative base to calc from.

[carcosa] 21/6/2021 12:11

Production profile

Q1/18 16,589
Q2/18 17,302
Q3/18 16,857
Q4/18 20,278
Q1/19 19,137
Q2/19 14,902
Q3/19 16,256
Q4/19 21,789
Q1/20 20,797
Q2/20 19,206
Q3/20 19,968
Q4/20 9,055 (COVID)
Q1/21 17,972
Q2/21 18,363
Q3/21 17,420
Q4/21 18,000 (my estimate)