Sylvania Platinum Share Discussion Threads

[rabiddog] 28/7/2021 10:33

Hmmm avacta or slp…know which one I’d rather be in !

[lostabillion] 28/7/2021 10:19

Sold Monday’s 30k holding for a quick 4% profit, in at £1.02 and out at £1.07.

Bought more Avacta with the proceeds.

[lostabillion] 28/7/2021 10:18

Sold Monday’s 30k holding for a quick 4% profit.

[stemis] 28/7/2021 09:43

It's a self evident truth that SLP's share price will depend on future commodity prices. However even if they stay as they are (and there's an argument that the price will rise) and SLP's valuation remains as it is, then eventually valuation will be overtaken by the amount of cash on the balance sheet. At the moment there is ~$100m plus around ~ $40m in working capital (which would turn into cash if commodity prices fell) and it is increasing at around $100m a year. Current market cap is $400m. $100m is around 26p a share.

[gekks] 28/7/2021 08:51

Being a LTH in JLP have watched here for sometime - yesterday was perfect entry point - and happy to have a dividend paying share.

[johnhemming] 28/7/2021 08:43

@johnr There is some truth in this. I can see the stock being worth something like its current price, but not £2.

[paleje] 28/7/2021 08:15

ST has a repeat Buy opportunity on these today.

[johnrxx99] 28/7/2021 07:34

johnh - to me the question is what is material. If I was a director of a company, I would not want my analyst to over pitch as that would make me look bad. So keep the numbers as low as you can and make me look good.

The people who are paid do what the people who pay say - in my experience.

[johnhemming] 28/7/2021 06:50

I have bought into SLP and sold out twice over the past 18 months. I picked up the tip from IC (for which I thank them). I am, however, wondering now what to do.

Commodities stocks obviously are driven by the price of the commodity. I have a reasonably good understanding of where that is going (or at least I think I have) for many commodities, but I really don't feel comfortable predicting PGM.

If you consider Rhodium


It was pretty low for some time, but then had a small spike and a bigger spike. What I would expect is that demand would adjust as people find better ways of doing things without having to buy as much Rhodium.

What then happens to SLP which is obviously otherwise cheap on a steady state basis. However, I don't think steady state is the right conclusion. I would expect at best a gradual reduction in income. Then we come into the complex questions as to what limits there are on resource etc.

Hence I feel best sitting on the sidelines for now.

I find Plat Hunters charts useful, but have not found how to use trading view to produce similar charts. Charting in the absence of news is I think a useful thing although I am more of an analyst than a trader.

[stemis] 27/7/2021 21:52

I wouldn't worry. Those who don't own (but might like to buy) tend to project their hope that the share price falls. Those who do hold project their hope that the share price rises. Twas always thus...

[tonytyke2] 27/7/2021 21:14

Really poor shorting post, just trying to exploit their own short position. Why don't you look at the 6/7hr chart today , the share price went up 10%.....

[plat hunter] 27/7/2021 19:59

Strong resistance going into the last couple of hours... Wouldn't be surprised to see 97p at some point before the week is outSLP 1hr chartHttps://www.tradingview.com/x/lFBYaiyV

[johnhemming] 27/7/2021 19:59

My issue with SLP is that I don't have a good understanding of where the basket price is going. Other commodities have gone up, but not as much.

[mr stephens] 27/7/2021 18:42

Investors have massively overreacted to the latest quarterly results from Sylvania Platinum (SLP:100p), a cash-rich, fast-growing, low-cost South African producer and developer of platinum, palladium and rhodium, marking the share price down 14 per cent.

When I last suggested buying the shares, at 125p (‘Profit from the commodity boom’, 4 May 2021), house broker Liberum Capital was pencilling in full-year revenue of US$209m, cash profit of US$149m, net profit of US$102m for the 12 months to 30 June 2021. Although Sylvania has yet to issue its annual results, collating data from the interim results, third quarter results and today’s fourth quarter figures reveals that the company has generated total net revenue of US$207.8m, cash profit of US$145.5m and net profit of US$96.5m (35.5¢ a share) for the 2020/21 financial year. Annual net profits are still 135 per cent higher year-on-year, and a high percentage of profit has been converted to cash with net funds 80 per cent higher, too.

Moreover, cash balances of US$101m are little changed since the end of the third quarter even though Sylvania has paid out a windfall dividend of US$14.3m (3.75p a share in April 2021) and settled provisional income tax and royalty charges of US$35.3m. Liberum had been forecasting a closing cash balance of US$78m in early May.

Admittedly, the pull-back in the rhodium price in the latest quarter meant that Sylvania’s average PGM basket price of US$4,059 per ounce (oz) was well shy of the record US$4,576 per oz in the third quarter. So, with output down 6.5 per cent to 16,289 oz, albeit in line with annual guidance of 70,000 oz, this contributed to a 20 per cent decline in quarterly revenue to US$44.1m quarter-on-quarter. Revenue from by-products contributed a further US$4.1m, slightly higher than in the third quarter, but as expected there was no repeat in the windfall sales adjustment (US$15m in the third quarter). The sales adjustment accounted for half the difference in Sylvania’s cash profit between the third and fourth quarters (US$58.7m and US$28.7m), a point worth noting for investors who may have been extrapolating the third quarter figures.

It’s also worth noting that although quarterly cash costs are up 20 per cent in local currency (R10,231 per oz) and 27 per cent to US$724 per oz in US dollars, the company is still hugely profitable. Cash costs account for only 18 per cent of the average basket price. Higher power tariffs will remain an issue (15 per cent increase in April 2021, and expect a similar rise next year), but this needs to put into perspective. Sylvania’s cash cost has increased by R1,700 in the past quarter, or less than 10 per cent of the increase in the average PGM basket price year-on-year. Furthermore, as host chrome mines (that shut down last year) start to reopen in a better pricing environment, then this will enhance the quality of feedstocks for Sylvania’s plants on both a grade and recovery rate basis, thus unwinding some of the additional cost pressure the company has been facing.

MOST READ
Today
Small Companies July 26, 2021
Bargain shares: Building momentum
Alpha Investment Trusts July 26, 2021
10 good value investment trusts for beyond the pandemic
Small Companies July 27, 2021
Bargain shares: Sylvania Platinum's repeat buying opportunity
With no near-term capital commitments, and over US$100m (26.6p a share) in the bank, Liberum expect the board to declare a full-year dividend of 4¢ (2.85p a share) at a cost of US$10.9m at the annual results to take the annual pay-out to 6.6p a share. It could be more, but the board have been conservative in the past. This means that the shares offer a dividend yield of 6.6 per cent and are trading on a miserly cash-adjusted price/earnings (PE) ratio of 2.5 for the year just ended.

True, Liberum’s forecasts for the 2022 financial year (revenue of US$222m, cash profit of US$164m and net profit of US$116m) are shy of the broker’s predictions three months ago, although the company could still double its cash pile to hit Liberum’s US$212m (56.5p a share) forecast by June 2022. Clearly, some perspective is needed as this is a £272m market capitalisation company that has a cash pile accounting for more than a quarter of its share price, and which could account for more than half by next June, and is being priced on three times forward post-tax earnings. The implication being that the rhodium price is set to collapse, and devastate Sylvania’s earnings, an outcome that is highly unlikely to happen for the reasons I outlined in my last article (‘Profit from the commodity boom’, 4 May 2021).

It’s worth considering, too, that Sylvania's average basket price of US$4,059 per oz is still 43 per cent higher than in the first quarter of the 2020/21 financial year, and 22 per cent higher than in the second quarter. The latest group cash costs of US$724 per oz compare favourably, too, on both those quarters (US$701 and US$803 per oz, respectively). This augurs well for comparisons in the 2021/22 financial year.

I first suggested buying the shares, at 14.5p, in my 2018 Bargain Shares portfolio, and the recent violence in the country had been spooking investors ahead of the fourth quarter results, another reason why the share price has pulled back from this summer’s record high (150p). However, the directors point out that Sylvania’s operations have been unimpacted by the violence to date. There have been multiple repeat buying opportunities in the past three a half years and I feel that another one has presented itself. Buy.

[ianb5004] 27/7/2021 18:31

Fred shred, dont take simon Thomson’s word in IC. He was advocating a strong buy on LOOPUP AT 250P last october. Its now down to 40p he gets it wrong too.

Not saying hes wrong on SLP but please make sure you check facts, all these publishing analysts have their own agendas when they are invested.

I bought a few slp today on the dip for a trade, i also hold THS and I’m still buying there as personally i see THS as the better investment.

[stemis] 27/7/2021 18:14

New Liberium research note. Target 195p

[faz] 27/7/2021 17:01

OTopic martinfrench. The advfn PXC thread is very informative, as are the YTube vids the company posts. I think Slp directors could learn something from them as last year they were equally quiet. All the rare metals connected to lower carbon emissions are going to be in high demand for a very long time.

[martinfrench] 27/7/2021 15:30

faz,

could have told us before....:-)

i'll take a look, dont have any copper shares

[faz] 27/7/2021 15:09

well I bought more this morning under 100p on the basis of 18 months out this share price will not be repeatable. And finally, to show patience is rewarded, PXC has decided to fly today; still way undervalued, like SLP now is!

[alan@bj] 27/7/2021 14:29

I always think that's what I'm paying my subscription for, Fred.

[fred shred] 27/7/2021 14:04

I take comfort from Simon Thompsons IC today. He’s smart on the detail. I’m less into the analysis paralysis - and more the over-arching fundamentals. Have topped up enough 10K today.

[stemis] 27/7/2021 13:50

Does anyone have further detail about this 35m tax charge - is this just a one-off as it is obviously pretty large relative to their earnings?

It's not a charge, it's a payment. It doesn't just relate to Q4.

---> The second provisional income tax payment for the six months to 30 June 2021 of $29.1 million, and the second provisional Mineral Royalty tax for the same period of $6.2 million were paid in June 2021.

[epicsurf] 27/7/2021 13:46

The second provisional income tax payment for the six months to 30 June 2021 of $29.1 million, and the second provisional Mineral Royalty tax for the same period of $6.2 million were paid in June 2021. Furthermore, dividend withholding tax of $0.53 million was paid to the authorities with an additional $1.0 million dividend withholding tax payable at the end of July 2021. The Company also paid a Windfall Dividend of $14.3 million to shareholders during the current quarter.