I’m surprised SMR is still so unloved, this is a very solid report by a company that just keeps quietly delivering.
I was expecting a much smaller dividend so I was particularly surprised by the ~10c dividend, which puts SMR on a trailing yield of about 6.5%. I was also happy to see them below guidance on costs, and delivering great 2025 guidance.
To be sure, this is backward looking report and their average sale price is currently about US$30/t lower than what they received in 2024. However, their cash generation in 2025 should be fairly similar for a couple of reasons, even at spot.
- Tax payable in 2024 was $US250m. It was oversized because it was paid in relation to a prior year’s profit. At spot, tax payable should be negligible in 2025.
- Capex guidance has been reduced by about US$60m.
- Added together, this is over US$300m, which is worth more than US$20/t.
From my perspective, SMR should be in a position to pay a similar dividend yield this year. This is more than enough compensation for me to wait for the steel and coal markets to improve, which they inevitably will.
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