My view is that we are almost certainly due for another downgrade.
Anecdotally, we are already behind in terms of shipments - only Enterprise 36,490dmt and incoming Voge Emma 36,839dmt this quarter. In the recent conference update CFO commented not really an issue with getting ships in, just cost a bit more but the availability is still there. Indicates that our shipment issues really lie in production (e.g. breakdowns with longer downtime, inability to execute expansion) due to labor constraints.
WA border backflip hurting all miners with FY22 planned expansion. Been watching the Booster Vax rates currently 50% and also lagging behind the state gov targets of 1% to 1.5% increase per day (e.g. 10/2/22 48%, 11/2/22 49.1% to 15/2/22 50%). Last week started Vaccine blitz but appears to be slowing... not sure why WA public generally indifferent for the vaccine booster and testing in general. Appears that case for open border sooner will rest in surge in positive cases rather than booster numbers as it stands. I'm sure setting a reopen date would work to push booster numbers but I'm getting off topic.
Pilbara recruitment posts haven't changed much. Filled place in the past 2 weeks relate to corporate office role. So not much of a gauge in headcount that can improve the at mine labour shortage. Due to the increase across the board in all industrial commodities, we are essentially in competition with everyone else (in this market I'm all projects become feasible and all making hay whilst sun shines (i.e. record copper, aluminum, coal etc. prices)). A positive is that workers who fill our positions will get paid two bonuses, one based on the price of Li as well as one based on time. I think this is pretty smart in terms of recruitment and retention as well. Linking remuneration based on commodity price allows PLS to share the good times and the bad with employees. We will also need to hire above capacity (if that is even possible in this market) to avoid covid isolation disruption for our employees when it occurs.
Ultimately, I do believe we are heading into a re-rate due to the above reality that we are having production issues.
So for those also playing at home, I have readjusted my numbers based on estimating month/s lost. Typically 1 month is about 30kt/m.
Logically as well as running the numbers, it is clear that shortfall in production hurt more than any price uplift in spod gained. So for those who are trumpeting how high and great chemical prices and spod are or will go, I don't mean to step on your toes but it won't compensate for the revenue in a likely downgrade in production for the FY and this reduce our share price.
Oh, for those also saying the drop is across the board - what if PLS is the market leader, the local bell weather and Li champion. And that if we are facing such production issues with our industry recognized management the ramifications for others in our ASX Li space will face similar if not more pronounced challenges or effect sector sentiment generally. Are we the chicken or egg? For me, I saw it in the re-rate up over last Dec and into Jan spill over into everyone else (CXO, AKE, LTR etc.) so why doesn't it also work in reverse?
In terms of the next update when the outlook for the year will be clarified, with management indicating late Feb, my guess would be for the last day of Feb. This will allow management max time to digest any WA border decision which McGowan has stated will be made this month.
This is relevant I think for those looking to adjust holdings between now and the upcoming announcement.
Thanks for reading this far - me trying to rationalise my thoughts in the short term based on what info is publicly available.
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