I hold both and I believe they are both good companies that will reward holders into the future. I hold in terms of diversification, but at all times we need to way up the strengths and weaknesses in both companies. Those strengths and weaknesses balance each other out well, hence the argument to hold both.
This is not meant to be in depth, but does highlight some (probably a few pages of strengths/weaknesses could be listed):
Location:
PLS - Australia - strong mining reputation, stable government laws, easy access to Asian growth. Risks - China gets annoyed with Australia, looks to other options if they become available. One location - risk of a major disaster/weather event good disrupt operation for a substantial period of time
GXY - strengths and risks as PLS for Australia. Diversified locations adding both strengths and further risks. Greater optionality in relation to customers. Risks include less stable Argentinian stability and Canadian weather.
Product
PLS - great spod resources and room to expand/grow very quickly. Plans to go to chemical, but on the forever waiting list.
GXY - Spod and brine options allowing for different customers and mixes in demand. Greater chance of supplying more reliable Europe/North America, but a wait and see. Will be selling higher profit chemicals in 18months time. At a small base, but a platform for future growth. Selling chemicals will be a big profit differentiator (short term at least until PLS hits the go button, but that will take time).
Finance:
PLS - has come around substantially and is now stable. But one needs to keep in mind that in 3 years shares on issue have gone from 1,645,654,847 to 2,896,895,632. Cash on hand limited for growth.
GXY - had first mover advantage and has remained conservative. Cashed up for growth. In 3 years shares on issue have gone from 407,380,590 to 505,284,884.
Growth:
PLS - easy path way to growth especially with AJM purchase. Plenty of options to grow and management team to deliver. However, all centred on one location.
GXY - Australian pathway is coming to an end and the benefits that brings. With exploration maybe 10 years left. Steady until then. All growth centred on Arg and Canada and it will take time to ramp up, but when do strong growth opportunities and profitable. Possibly then they will have cash to buy another player out in Australia and remain diversified across 3 continents.
Overall:
There is much more to say, more comparisons to be made, but they both have strengths and weaknesses. Each point could be stretched out and discussed in greater detail, but that is not the point of this post.
Key to the post was to highlight that it is not easy to talk about the strengths of one without the other. Balance is key, and if one is looking at balance holding both is key. Many of the key commentators hold both and that is for good reason.
TA and FA looking great for the sector now, both will do great short and long term.
My next short term milestone for GXY is waiting for SDV details and offtake partners. For PLS it is waiting for the big move with POSCO. This will happen at different points and the SP with converge and diverge and rejoin along the timeline.
Look at the pricing forecast from just 6 months ago from Roskill. How conservative is it. I have placed the red line to show what could play out based on today's price. Not many analysts have penciled in the red line happening. Should that trend continue, all analysts price picks for the sector are wrong. Rerate after rerate will come and both companies will prosper. Even the little juniors will too.
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