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Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
Hi Tharisa. I agree that the dividend commitment is excellent and a much needed show of confidence. This commitment has limited the downside pressure on the share price. I am grateful for that.
The persistent issue however is Karo. Karo is a sword of Damocles because the project is uncertain to be value accretive and undermines the balance sheet, which could become a problem if Chrome pricing corrects. Unfortunately this creates a great deal of uncertainty and risk. The market does not want you to sink such a large amount of capital into Karo with such an uncertain outlook for PGMs.
Is Tharisa able to more clearly justify this project in the context of the plethora of unknowns regarding PGM and Chrome outlook and the balance sheet concerns? Until management can speak to this project with absolute clarity, the share price will remain under pressure. To date it feels like management is irrationally dogmatic in the face of much uncertainty.
"Would be much better at current market price to have a split buyback/dividend policy in my view"
That policy has not helped Sylvania Platinum's (SLP) share price.
With "the dividend policy of distributing at least 15% of consolidated net profit after tax"
And lets say the headline EPS of USc27.5 FY23 can we work out approx consolidated net profit or do we wait to 14th?
Thinking this could be a buy on an income basis?
Is it 15% of 27.5c so approx 4.125 cents and we have already had 3c ?
The anticipated EPS of 27.5c/share is about 18% down on my expectation which will now result in PAT of around $84m and total dividend of around 4.25 to 4.5c/share so the final dividend will probably be 1.25-1.50c/share. I suspect the lower profit is a result of having to buy in more 3rd party concentrates at the Tharisa mine and bigger losses at Karo. The actual result out on the 14th suggests some heart searching and delays in the last week or so.
Still big decisions needed on Karo as others have said below, the Company really needs to explain the forward path so for me it is not yet a buy on an income basis if the profit could be lower in 2024.
Mike, just what I expect 1.5c divi, but the nub as you suggest is going forward. The PE is 3 in the rear view mirror. Next year if this share price was maintained profits could well be half making the PE 6 which is not amazingly low given Karo risk a lessening pgm demand. The dividend tells the story 9c 7c 4.5c accounting for a share price halving with a bit more baked in for next years profit fall. If halves again and we get a divi of 2.25 then presumably share price will again. However with most profit now from chromium the ke for me is if that continues to decline. If it turns back up then we shall be fineā¦.if
Time to be prudent -not a penny more on Karo until a significant upturn in the longterm PGM prices-use funds to make SA mine more cost efficient -what has happened to the long ago production targets of 2 mt of chrome and 200000 ounces of PGMs annual output that were targeted long ago-there must be better ways for the company to spend its funds than on the development of Karo-the continuing cut in dividend payments is very disappointing-Karo was always a very risky investment based on sustained high PGM prices-the cash costs of over $1000Per ounze were too high
The dividend is directly related to the NPAT, which, let's be frank, is largely riven by commodity prices, we do not cut the dividend, we have a dividend policy, which we have exceeded every year since we paid dividends
It is interesting that the last normal year prior to Covid (year ended 30/92019) the average PGM basket price was $1016 which than spiked due to Covid and perhaps the Ukraine war.So unless there is an upturn in demand or downturn in supply the current PGM basket price circa $1300 appears to be about right .I know according to the WPIC there is supposed to be a large platinium deficit and some predict an upturn in PGM prices next year but so far this has not been reflected in the platinium price.The Karo cash production price is over $1000 per PgM price which does not reflect well with the above basket prices
Thanks so yeah 15% of 27.5 cents or thereabouts for the year.
With regards the PGM price going forward no one know but the cure for low commodity prices is low commodity prices (assuming there is still a demand). All THS need to do is still be standing in position to capitalise on the upturn.
Long term graph here goes back to 1993 lowest Platinum price $350 Aug99 drawing a line from there to 750 in Apr20 I'd say strong support not much lower than where we are today...
GLA
I would point out the 15% NPAT is the minimum dividend -a final dividend of 2c would represent a payout of circa 18% -bearing in mind the cash balance of circa $125 million to round this down would seem unnecessary.-.5 of a cent is $1.5 million.
I would also add unlike other Pgm producers no special dividends were paid in the boom year and part of the large cash balance must be due to this-so a final dividend of 3 or even 4 c could be justified.-even 4c is only a 25% payout which does not seem too high
They need the cash for Karo, not efficient to give us more and then borrow for Karo at maybe 10%?
They are delaying Karo for at least a year-at current PGM prices Karo appears to be throwing good money after paid -a slightly higher dividend is totally immaterial in the over all picture and shows goodwill towards shareholders -more valuable than a few dollars in interest
A couple of extra million in dividend is a rounding error in relation Karo costs and the $125 million in the bank
Well let us see but I would guess the usual 17% or so which is about 1.5 to come in next divi but hope you are right and we get double,
I tend to agree that maintaining a certain level of dividend, when there is a lot of cash in the bank is important to shareholders. Its not all about profit after tax in any given year. Smoothing dividends for investors is important, well it is for investors! That said, I also like asset growth. The diversification into Chrome was excellent, and anyone buying now basically gets that investment for free as the shareprice is back to where we were a couple of years ago.
Also, Tharisa make it very clear that the dividend will be rapidly moving, depending on the price of PGM and chromium, and always be a little bit above 15% of the profit from them. When you buy this Share, one should be aware that the dividend moves wildly, it comes to the same in the end, just higher dividends in good years lower in bad and with mining good and bad can be very different
I know exactly what the current policy is, and the guidance is excellent in knowing that profits are shared with shareholders.
However, a slight modification to the policy where the minimum percentage returned is banded, and a greater percentage of profit is returned at lower profit levels would be good. For a shareholder it would flatten the dividend profile, while still leaving plenty of funds for expansion. If the minimum returned was 30% at expected MPAT then the dividend would be maintained.
This would help stop the yoyo effect we get. Great for the traders, not so good for investors.
The directors would then have less profit to work with when prices are low, which is exactly the time when you want to limit growth, and the likely result would be the Karo time line would be extended.
Of course the directors still have this flexibility with the current policy and may still decide to maintain the dividend.
Totally agree Rylidan-net profit after tax in any one given year should not be the only factor determining dividends -cash flow,accumulated profits and cash balances should be taken into account
Anglo American AAL.L is preparing to freeze spending on growth and widen job cuts in South Africa, going far beyond its initial savings target and paving the way to mothballing some higher-cost platinum mines, sources familiar with the matter said.
"Anglo American AAL.L is preparing to freeze spending on growth and widen job cuts in South Africa, going far beyond its initial savings target and paving the way to mothballing some higher-cost platinum mines"
The solution to low commodity prices is low commodity prices.