OK maybe time for some actual analysis of some numbers.
BTW, b4 I get started, on a side conversation
@WhatsTheTip ... what's you feeling on "expected" number for DSO price in H2/23 (thinking specifically of RDT) benchmarked to SC price.
So these are some generics ... taken from Goldman Sachs April 12 release ... so that way the hate can be spread around and many will ignore the lesson within.
This is not rocket science right. Lithium Producers (of spodumene) = (the Aussies) PLS, MIN, AKE, IGO plus you can now add CXO and shortly SYA (and some have other parts to their business) plus then you could layer in ALB, SQM, LTHM and Ganfeng for international flavoring and again all of those have more than just spodumene production in their business - but they all end up producing either Hydroxide (spodumene) and Carbonate (Brine) aside from LTHM who imports some of their Carbonate (from Brine) into NA to further refine to Hydroxide for its customers. Soon to add to that international loist is SGML and LAC.
This is the game we play. We can all "model" at our EBITDA from our own pricing scenarios (or you could use some that PLL have provided in last presentation). I am going to illustrate using GS and their valuation for PLS (which I hold) for no other reason that it is a large pure play (at present) spodumene miner.
Because it is "easy" I will focus on EV/EBITDA for the next twelve months (NTM)
I highlighted the "yellow" cells because while the sector average is 7X and GS is saying 5.2X by their calcs ... and their commodity price forecast ($1,600) is much lower than present spot (~$4,000). That should help explain their neutral rating as upside/downside
But what might that mean for PLL in their FY 2024 (Jan'24 - Dec'24)
I will assume 113,000 tonnes of SC for sale.
I will assume it is SC5.4 and $3,150/t is the ASP.
I will assume our CoGS is $810t
Current SOI is ~19.2M
Old Aussie figures it to look something like this ...
Those yellow highlighted cells are saying that IF between 4X - 6X is used as an EV/EBITDA multiple AND we receive an average selling price (ASP) for SC5.4 of between $2,900/t - $3,400/t the stock price can be expected to be valued between US$49.24 - US$91.53 with the midpoint US$68.91 and assumes our cost of goods sold is US$810/t, we sell 113,000 tonnes and shares on issue remain at ~19M. In AUD on ASX call it ~$1.03
You are of course free to make your own assumptions - I think US$68.91 is both conservative and reasonable using this simple valuation method (very popular on HC, particularly on SYA forum). But it is very sensitive to SC5.4 price.
Keep in mind it is ONLY valuing based on EBITDA ... and the only "direct" EBITDA comes from NAL OTA (I am not including the EBITDA that remains in SYQ).
Many other aspects to valuations... this is only 1 part and I cannot stress that enough.
(20min delay)
