Sylvania Platinum Share Discussion Threads

[tonytyke2] 23/8/2021 10:00

With respect to Rhodium, comments from Blackrock World Mining Trust (BRWM) half year report published only just last week below.  

'We continue to remain positive on the medium-term outlook for the PGMs and believe the PGM basket will remain high relative to history given limited new supply projects, increasing PGM loadings for auto catalysts to meet rising emissions standards and a sustained global auto recovery. The global semiconductor chip shortage has impacted global auto production during the period and, in turn, the demand for PGMs. As auto demand recovers, we also expect to see a demand recovery across the PGMs. Among the PGMs, the rhodium market continues to look extremely tight with the market in significant deficit and expected to remain so for some time due to increasing demand from NOx emissions standards and a lack of supply growth.' 

Now growing reports of Global car sales expected to start recovering in the final quarter of this year, as the shortage of computer chips begins to ease.



Cannot believe comments on here around poor/low dividend payments, some people may not be picking up on the additional special dividends being payed!  I am expecting another one in the next results announcement early September e.g. that would then be 2 x special dividend payments payed out this year. 

Good luck to you all in SLP.

[johnrxx99] 23/8/2021 09:56

Chinese playing games with the Yanks. Loaded up - I hope not another falling knife!

[plat hunter] 23/8/2021 09:39

Here we go typical JLP hunters out, obviously very secure about the immediate future desperate to steady the ship.Obviously JLP is going to rocket 1500% like bitcoin over the next 6 weeks my mistake

[purplepelmets] 23/8/2021 09:36

Plat Hunter23 Aug '21 - 09:23 - 5948 of 5950
0 0 0
Either the cash pile returning or investing in a way to offset the cyclical collapse of Rhodium.


Beware Kenny, this is exactly what I said would happen on the JLP thread last year and was trolled for it.
deme123 Aug '21 - 09:24 - 5949 of 5950
0 0 0
you were trolled because you sold out at 5p and said it would collapse to 2p again.

numpty

ffs Plat never learns. He used to troll the ARB thread claiming he alone understood crypto mining and law of diminishing returns means the share price could never rise. It was 3.5p at the time and went on to 100 bag within 3 months of the morons claims. Of course he darent show his face there after such a cretinous call.

[deme1] 23/8/2021 09:24

you were trolled because you sold out at 5p and said it would collapse to 2p again.

numpty

[plat hunter] 23/8/2021 09:23

Either the cash pile returning or investing in a way to offset the cyclical collapse of Rhodium.Beware Kenny, this is exactly what I said would happen on the JLP thread last year and was trolled for it.

[kennyp52] 23/8/2021 09:13

Market capitalisation: £234.33 million

This is also my point SteMIS .. and cash / profit is still substantially positive . It makes you wonder what investors want .

[johnhemming] 23/8/2021 09:12

It is a hard one to calculate. I don't think there is a threat to solvency because it has a ton of cash. Also I would expect it still to be profitable after the Rhodium price spike.

[stemis] 23/8/2021 09:08

What we are seeing is how volatile SLP is to the greed/fear swingometer of private investors. One minute the fundamentals are great for medium term price strength, the next we are talking about the threat to the solvency of the company. Even at these prices SLP is pumping out $100m a year ebitda and the fall in prices will release working capital boosting cash balances, which could end up as high as $140m by Q1. At 86p market cap of SLP is $319m.

[kennyp52] 23/8/2021 09:06

So we could end up with a cash balance 50% of MCAP ? Think on that one and decide if this has been oversold . PGM basket price is still way up on average on last year and double the year before . If car production is the reason there is a pull back on RH then that will surely change within months as vaccination of the rest of the world gathers pace . I need a rise elsewhere to cash in having taken my profit at 132p with every intention of returning.

[johnhemming] 22/8/2021 15:39

I am with PH on this. Rhodium has spiked a few times in the past. We have a turn down in car production and a movement away from using Rhodium. SLP has to be valued with a lower Rhodium price. I have bought into SLP twice and then sold out. I may buy back in, but I need to feel more comfortable as to where the basket price is going.

Otherwise it means hanging onto the stock with a low dividend for a long period of time. The company may do some buy backs, but the market may feel a little burnt.

Here is one company's proposals for moving away from Rhodium for jewellery.


Here is an page with older charts. You can see spikes every so often. Those, one assumes, depress demand and direct people into other solutions so the price drops.


I have done some analysis on the interims and I estimate that of the 57.4m profit and 58m EBITDA Rhodium revenue accounts for 54m which gives a hefty gearing effect on the Rhodium price.

Seeking Alpha had a look at Rhodium a few months ago


I think a reasonable assumption is that we are in the downward part of a Rhodium price spike. The management are being cautious which is sensible. However, we have to judge what to do given we cannot sensibly hold the stock for a dividend.

I have also read the chairman's letter in the 2020 report which includes the following which explains why they are so cautious:
"I am reminded of the ‘Black
Swan’ event that happened to Aquarius Platinum when the PGM
prices collapsed in September 2008. At the time I was the CEO and
Aquarius had smelter advances equalling a large percentage of the
expected revenues for the QP for platinum at $1,850 per ounce and
for rhodium at $7,500 per ounce and a month later the prices were
$850 and $750 per ounce respectively. The prices did not recover
quickly (unlike the recent March 2020 collapse of rhodium that
lasted a few weeks). The end result was the near bankruptcy of the
operating company in SA, an emergency rights issue in the Bermudan
holding company and so much shareholder pain. We are fortunate
at Sylvania that our strong (some say lazy) balance sheet avoided this
chaos in April this year."

I have also found that they get the S&P Platts price for the metals which they say is lower than JMM prices.

[dougmachin] 22/8/2021 12:27

Platy, I bow down to the longevity of your investment here, but I don't see that price ever being seen again.

[plat hunter] 22/8/2021 12:12

5k an ounce eventually

[dougmachin] 22/8/2021 10:34

Rh prices spiked and we're now going down the other side of that spike.
Need to see where Rh prices stabilize / bounce and start going back the other way.

[maxplus2] 22/8/2021 10:02

Thank you for the analysis. Having read your message, the prediction for Net Profit and Cash Profit are below Broker's Forecast. Is thst the reason the share price dropped?

[ddubzy] 22/8/2021 08:42

Bet you wished you bought some at 14.5p though! I don't see it as ramping, just purely highlighting the fundamentals here. You can't argue against the cash pile SLP are generating. Sure, if your looking at short term trading, then you'd be a bit pee'ed off if you bought at 120p on the strength of ST article expecting this to shoot to 200p in double quick time. But as a LTH, I see no reason why you wouldn't buy and add on weakness.

[sev22] 21/8/2021 19:30

I thought it was worth revisiting ST's last article on SLP which in my mind reinforces what a bargain share it really is now.

Bargain shares: Sylvania Platinum's repeat buying opportunity.

The South African producer of platinum, palladium and rhodium has reported record profits, and has a cash pile equating to a quarter of its market cap.

July 27, 2021.
By Simon Thompson:

Annual net profit increases 135 per cent.

Cash balances exceeds US$100m, or 26 per cent of market capitalisation.

Recent pull-back in rhodium price reduces basket price in fourth quarter, but it is up 93 per cent year-on-year in US dollars.

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.

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.

[plat hunter] 21/8/2021 08:04

I don't do hope tony, i evaluate my positions several times a day and act accordingly. Quite pleased as it goes as I called this particular breakout bang and got out for scratch earlier in the week ;-P

[dougmachin] 21/8/2021 01:53

Looking back at Rh prices, that seems to be (one of) the key drivers here.
SLP's share price was rising in line with Rh increase from 2018/19.

Rh price is still so much higher, than it's 'normal' price range for almost 30 years, with only 1 other spike to 10,000.

A lot depends on where Rh finds it's new baseline. 15,000? 20,000? 20,000+?
With that chart though, very difficult to say, Rh price increase a very recent phenomena.

[maxplus2] 21/8/2021 00:02

I think it has gone down due to last quarter results.Whilst the record profits realised in Q3 were boosted by the spike in the price of rhodium and its effect on our basket price, we have seen quite a pull-back in the rhodium price in recent months which has inevitably impacted the Group's revenue and profit for Q4.

[tonytyke2] 20/8/2021 22:40

I think plat hunter was hoping this would get to 110p in the short term (and so was I), but trading SLP is so difficult at the moment.

I cannot believe the value in this share and I am just trying to work out when to add more. No doubt some larger companies may now be taking a more active review/interest in SLP. SLP have loads of cash!

Yes, Rhodium demand maybe impacted somewhat by the car/microchip issue, but try to look forward to what things may be like in 6-12 months from here. IMO the supply chain issues could be resolved or near resolved. This is turn imo, will increase the demand for Rhodium again and the price increases. Ebb and Flow, meanwhile SLP continues in the background to make great profit on the basket price.

For me to add more shares, I should continue to monitor MACD, Relative Strength and Volumes to try and spot some stability and then some sustained positive days of divergence to the upside....... However, I may just buy more on instinct(:-)

Good luck to you all with your investments in SLP.