What’s PLS worth?
As per my post on the daily SP chatter string, I’ve started a new string for valuation/analysis/critique. Hopefully this string can be more dedicated to fundamental analysis of PLS rather than wild speculation.
IMO there’s a lot I like PLS … it’s a true Tier 1 asset (large asset, projected to be at sharp end for cost), leveraged to growth of EV and I also like the relationship/options with Posco. However, being in commissioning/construction mode and producing a new mineral with volatile pricing – it’s at the high end of the risk spectrum and SP volitivity. So, what’s it worth today?
Market Analysts:
- ThompsonReuters consensus 12 month SP target is $1.02 across 7 analysts.
- High$1.20 (unchanged since Aug18); Low $0.70.
- 5 of the 7 analysts have downgraded the SP target since start Apr19
Bringing those 12 month targets back to SP as of today, the analysts have an averagevalue of ~90c.
I prefer to try to understand the range of values based on key risks. IMO the biggest of these are:
- SP6 price received
- SP6 yield (driving both costs/dmt and production tonnes)
- Time frame for existing/new production to achieve design performance
Potential CAPEX blowouts and other OPEX are minor risks IMO (ie. I think these can be well managed by KB and his team). On the upside, Posco JV and Stage 3 could add value, but as I said on the other string, there are too few details to estimate value IMO. If others have methods of valuing these (as opposed to just speculating what they’re worth) – perhaps they can add them to the string.
I’ve therefore created a matrix of values based on:
- Operating cost basis uses latest Stage 3 advice (US$290/t at 75% yield). This is much higher than the Stage 1 LOM figure (US$207/t) but PLS have since adjusted down the yield and possibly other components. Therefore, US$290 may be a tad conservative (but Stage 1 Feas too bullish).
- CashOPEX components affected by yield have been scaled (ie. mining &processing) those unaffected left as per Stage 3 advice (eg. Royalties, nativetitle)
- Simple 10x Net Operating Cash Flow valuation model at time of performance metric.
- Future performance discounted back to Jun19 at 12%pa.
Results below. I’ve included the Stage 1 only numbers to illustrate the importance of getting to design yield (15-20c worth in SP terms). Seems to me the analysts (on average) are projecting either much lower SP6 prices than PLS is currently achieving and/or a lack of confidence in PLS achieving design yield.
As a reference point, PLS based their Stage 1 Feasibility Study on a long term SP6 price of onlyUS$537/t.
Have others done similar price/yield/value analysis? Thoughts?
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What's PLS worth?
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Last
$3.80 |
Change
-0.080(2.06%) |
Mkt cap ! $11.43B |
Open | High | Low | Value | Volume |
$3.82 | $3.84 | $3.76 | $101.5M | 26.69M |
Buyers (Bids)
No. | Vol. | Price($) |
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2 | 80354 | $3.80 |
Sellers (Offers)
Price($) | Vol. | No. |
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$3.81 | 241726 | 10 |
View Market Depth
No. | Vol. | Price($) |
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21 | 96267 | 3.790 |
30 | 415253 | 3.780 |
26 | 290683 | 3.770 |
39 | 223204 | 3.760 |
96 | 1150018 | 3.750 |
Price($) | Vol. | No. |
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3.810 | 71805 | 8 |
3.820 | 265769 | 12 |
3.830 | 273339 | 12 |
3.840 | 217551 | 6 |
3.850 | 230494 | 9 |
Last trade - 16.10pm 30/05/2024 (20 minute delay) ? |
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Last
$3.80 |
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Change
-0.080 ( 2.07 %) |
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Open | High | Low | Volume | ||
$3.82 | $3.84 | $3.76 | 7705296 | ||
Last updated 15.59pm 30/05/2024 ? |
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