Sylvania Platinum Share Discussion Threads

[kenmitch] 02/5/2023 16:27

martinfrench

I won’t respond after this as you clearly have limited understanding of buybacks as have a lot of posters on the lower quality ADVFN bulletin boards.

For starters of course I wouldn’t claim that all lower share prices are related to buybacks? Of course they aren’t and that you can ask such a stupid question speaks for itself. Loads of shares fall that haven’t bought back at all.

And Whitbread for one is not a rubbish Company. They just made a mistake with their buyback decision. And on that WsM812 then made the erroneous claim that Companies only buyback if they think the share is undervalued. The sensible Companies like Next Do do that, but there are multiple examples of Companies buying back without considering that so important point.

Facts on share buybacks include:-

1. They reward those who want to sell as there is a willing buyer; the Company buying back their shares.

2. Buybacks increase eps.

3. Director bonus pay is quite often based on eps. So that’s a reason why sometimes Company bosses are so keen on them!

4. Buybacks reduce the number of shares in issue, so dividends, if paid are being paid out on fewer shares and so at less cost.

5. IF…as so many bb posters wrongly assume…..all buybacks = higher share price, all investors would have to do to guarantee share price gain would be to buy shares in those Companies. If only that WAS true.

Yf231

I had already pointed out that Next knew how to manage buybacks and that they’ve halved their share count as a result of them.

[yf23_1] 02/5/2023 16:26

Next have done well with buybacks

[wsm812] 02/5/2023 14:13

Buybacks will be good for shareholders if the company is and continues to be well-run. I believe SLP are, so must we all if invested.

Companies will only implement buybacks if they determine that the current share price significantly undervalues the company. I belive it does.

Buybacks increase the demand for a company’s shares: As a result, open-market buybacks automatically lift its stock price, even if only temporarily. I bought more on this reasoning alone.

GLA

[marksp2011] 02/5/2023 13:36

Buybacks re good if they are buying in a share that has positive momentum

If a share is worth 100 80p Business 20p cash and you spend the 20p buying shares the likelihood is that the share price will be 80p, ie what the share is actually worth in a business context. No reason to suppose that the share will be worth 100p again unless the company grows. and that takes time

The EPS arguement is usually more related to exec compensation schemes :)

Don't call it a buyback, call it a partial liquidation.

[kenmitch] 02/5/2023 13:22

Martinfrench

There are an enormous number of similar examples as I have already explained.

Here are just a few more.

1. The big banks bought back heavily ahead of the Banking crisis and then either went bust or the share crashed. And the share prices are mostly STILL much lower than they were 15 years ago.

2. Marks and Spencer “rewarded̶1; me with a £2 BILLION buyback at £4. Share is now about £1.60 and never got near to £4 again.

3. Whitbread wasted almost the entire £2 billion or more proceeds “rewarding shareholders” with a massive buyback. Again the share has never got back to the buyback prices.

AND too often Compsnies that bought back heavily p, later had to go for rescue placings or rights issues to raise new money.

Both Marks and Spencer and the likes of Lloyd’s Bank did that.

I think your reply confirms what I wrote earlier. I.e you are, as are so many others, convinced (as I am) by the theory of buybacks but then don’t go on to research whether they worked.

And hence the nonsensical comments about them on bbs like this one.

EDIT. Re your final sentence:-

“ not much point in having a discussion if your just presenting limited facts to support your theory.”

What facts did you produce your theory???

And my post was not about the (CONVINCING) theory, but facts about buybacks. Presumably you realise it was you, not me, who posted the theory!

Not all buybacks are a waste of money.

e,g Next have used buybacks to reduce their share count by half.

My posts have just been about the ill informed comments about them here.

[andrewhbruce] 02/5/2023 12:17

Share buy backs increase earnings per share, often it is linked to management bonuses, so they can cream off more in terms of their remuneration. THIS I am sure is not the case here, as we have such large cash reserves. However it surprises me that the Company does not have better uses for the reserves and by that I don’t mean higher dividends.

[martinfrench] 02/5/2023 12:13

one example doesnt exactly prove anything does it ?

i'm assuming there were a lot of other factors that made the share price do that.

the only time i would disagree with buybacks is when you borrow money to do so

apart from the obvious lift to eps and therefore directors easier to hit targets, companies like sylvannia, shell, bp, .....many others, have it got it wrong ?

not much point in having a discussion if your just presenting limited facts to support your theory.

[kenmitch] 02/5/2023 11:46

martinfrench

Perhaps you haven’t looked in any detail and just believe the convincing theory?

e.g start with just one example; the Aberdeen buybacks from £5 at start to £1.40 in five years and now £2.

Can you explain please why (presumably) you think their buyback was a good idea “where the effect lasts over many years,” because in my reading the effect that has lasted over many years is a falling share price and no benefit at all from their buybacks. And there are countless examples similar to ABDN.

[martinfrench] 02/5/2023 11:06

have never understood the negativity and misunderstanding around buybacks.

people expect it to have an instant, permanent lift, other things being equal ?

not only does it save on in our case high dividend payments, the effect lasts over many years that the company is in operation, and its not as if you can exactly isolate the buyback effects, many other things going on

but, can only see it as a good thing, puts a firm base under the share price, other things being equal of course

and this company have proven time and time again they are NOT stupid.

[soilderboy] 02/5/2023 09:23

You are bang on. Often, this is a waste of money, as seldom does the full buyback cost lift the price to the same value. If, as you rightly said, at all.

[kenmitch] 02/5/2023 09:16

Buybacks don’t “put a floor on the price for sure,” as there are multiple examples where they haven’t. E.g Aberdeen ABDN started buying back in 2017 at £5 and have bought back every year since and share price now around £2.

Hopefully the SLP share price is already so depressed that there might already be near the floor.

[crabbeng] 02/5/2023 08:26

Wish it would put one on the spread, now 3.1%

[rabiddog] 02/5/2023 08:18

Bout 280ish million shares in circulation so assuming £0.95 a share its just under 4% of total shares. It’ll put a floor on the price for sure.

[nickwild] 02/5/2023 08:07

hardly massive

[wsm812] 02/5/2023 08:04

Massive share buy-back scheme announced. Nothing better than the compnay buying it's own (short-supply) stock to boost it's value.....hold tight and don't sell.

[bountyhunter] 29/4/2023 15:33

You're quite right Haywards, the Kitko chart doesn't show the recent Rhodium prise rise, the chart on this page does...

[masurenguy] 29/4/2023 11:42

You're right - I was referring to this years profit. Liberum think next years will be circa £24m. Your figure of £17.5m is based upon extrapolating all 4 quarters as being at the same level. This does not reflect past ratios but then nobody can be certain at this stage how next year will play out.

[stemis] 28/4/2023 18:49

We are obviously talking about different things. I'm talking about the current run rate of profitability. In Q3 it was $7.8m (pre sales adjustment), so deducting 30% tax and using $/£ 1.25, that's £4.3m or annualised £17.5m.

You are talking about what you think the declared profit for the year will be so you might be right, but what is relevant to valuation is current profitability levels.

[kennyp52] 28/4/2023 17:58

average BBI for the 6 months to 31/12/22
= $2,413 per pgm oz

30/07/2022 = $2,479
31/08/2022 = $2,625
30/09/2022 = $2,464
31/10/2022 = $2,345
30/11/2022 = $2,355
30/12/2022 = $2,212

So it doesn’t take a lot or working out that basket is down circa $600 on H1 … say 38k Oz = $23mn plus slightly lower H2 targeted production. I don’t think you are far out Masurenguy

[kennyp52] 28/4/2023 17:50

Copied from JLP board


average BBI (so far) for the 6 months to 30/06/23
= $1,837 per pgm oz

27/01/2023 = $2,143
28/02/2023 = $1,769
31/03/2023 = $1,633
28/04/2023 = $1,802

Starting to rise and even at this average at the ounces they are producing they are churning a lot of free cashflow

[masurenguy] 28/4/2023 17:38

They made a PAT of £26m in the first half of the current year so my 22/23 figure above is based upon a second half reduction of circa 65% to £9m. So what is your projected PAT for the current year?

Liberum are projecting a decline in PAT to circa £24m next year, which is nearly a downturn of 32%. Rhodium prices turned up recently but nobody at this stage can be certain of how that will play out next year.

[stemis] 28/4/2023 15:47

It isn't making £35m at current prices levels

[masurenguy] 28/4/2023 15:33

At 93p, the company has a market cap of circa £263m, which includes cash of £115m. The current EV is therefore £148m with PAT of £35m, which looks like pretty good value to me before you even factor in the yield.

[haywards26] 28/4/2023 14:28

I will feel much happier once Rhodium is $10k + :)

That Kitco chart above is flat lining when in reality the Rhodium price has been rising nicely over the last few days.