Red 5 Limited (RED) - KOTH in line but SLR asset guidance disappoints (Petra 30/8/24)

RED’s maiden full year report following the successful merger of RED and SLR late in June, shows a strong balance sheet with financials for KOTH largely in line with expectations. The numbers are overshadowed however, by the FY25F group sales guidance of 390-430koz at A$2,350/oz (mid-point). This is a miss relative to our forecast of 419koz @ A$2,022/oz. Guided capex, exploration, and costs at Sugar Zone add another ~A$500/oz to the cost base.
Recutting our forecasts in line with FY25F guidance has lowered our TP by 14% to A$0.44/sh (prev. A$0.51/sh).

To paraphrase Maynard Keynes "When the facts change, I change my mind ... what do you do Madam"
The SLR results "disappointed" but "KOTH in line" .... the market reacted to this before the POG rebounded .... could it be any plainer ?

TA (technical analysis) is not a change of mind, but a qualified prediction of price action at a point in time, of possible price action - get it ?
37c is not a prediction but a TA support/resistance area, based on previous price patterns .... most with a modicum of TA would know this.
Not everyone has read my previous posts, and some seem to appreciate having a visual compilation of associated phenomena ...

What can one say about the Tara's of the world except to say that amount of bile is pathological ... seek help.

The article below reminds one of that old market maxim " the commodity leads " - it moves first, and will drag stocks up (or down) eventually ... once this move appears sustainable, stocks will start to catch up, tier 1 first, then mid tiers, then juniors .... a market crash can overrule this.

Gold price soars but mining stocks have not kept pace

CAMERON JUDD

3:08pmSeptember 13, 2024

(The Australian 13/9/24)
"The relative valuation of gold miners versus the rest of the market is also attractive. Based on forward earnings multiples, Australian gold miners are trading at a 40 per cent discount to the rest of the market. In addition, the market consensus gold price for the next 12 months is about 10 per cent lower than the current gold price of $3780 in Australian dollars. Should the gold price remain at these levels for an extended period of time, then the market will need to upgrade its forward earnings forecasts, making gold equities even cheaper. Gold miners’ cashflow generation potential and attractive valuation compared to the rest of the market cannot be ignored by the market for too long.

The disconnect in equity performance is even more apparent in the gold developers and explorers. The outperformance of developers and explorers is typically later in the cycle when investors are looking for value further down the mine life cycle. At current discounted levels, it remains cheaper to acquire someone else’s ounces than it is to discover new ounces.
The potential for sector consolidation could further enhance the appeal of gold miners as an investment, particularly in an environment where the price of physical gold continues to rise, and more investors seek exposure."