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Royal Bafokeng Platinum – SELL
Renaissance Capital
6 February 2019
Metals & Mining
Figure 101: Royal Bafokeng Platinum, ZARmn (unless otherwise noted) |
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Royal Bafokeng Platinum |
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RBPJ.J |
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Target Price, ZAR: |
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25 |
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Market capitalisation, ZARmn: |
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7,285 |
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Last Price, ZAR: |
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29 |
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Enterprise value, ZARmn: |
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10,629 |
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Potential 12-month return: |
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-13.0% |
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Dec-YE |
2016 |
2017 |
2018E |
2019E |
2020E |
Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
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Income statement |
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Balance sheet |
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Revenue |
3,342 |
3,499 |
3,505 |
7,419 |
8,456 |
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Net operating assets |
13,944 |
13,988 |
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15,873 |
18,580 |
19,950 |
Underlying EBITDA |
553 |
673 |
737 |
2,132 |
2,783 |
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Investments |
35 |
36 |
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40 |
40 |
41 |
Underlying EBIT |
241 |
312 |
372 |
1,503 |
2,094 |
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Equity |
11,156 |
10,679 |
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11,086 |
15,690 |
16,872 |
Other operating items |
-68 |
-106 |
-197 |
-188 |
-204 |
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Minority interest |
3,658 |
3,745 |
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3,815 |
0 |
0 |
Net interest |
84 |
85 |
23 |
-218 |
-248 |
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Net debt |
-835 |
-401 |
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1,012 |
2,930 |
3,119 |
Taxation |
8 |
-84 |
-80 |
-307 |
-460 |
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Balance sheet ratios |
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Minority interest in profit |
-94 |
-96 |
-61 |
0 |
0 |
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Attributable profit |
168 |
-753 |
30 |
790 |
1,182 |
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Gearing (net debt/(net debt+equity)) |
-8.1% |
-3.9% |
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8.4% |
15.7% |
15.6% |
Headline earnings |
167 |
109 |
43 |
790 |
1,182 |
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Net debt to EBITDA |
-1.5x |
-0.6x |
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1.4x |
1.4x |
1.1x |
HEPS, ZAc |
87 |
56 |
21 |
380 |
568 |
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RoCE |
1.4% |
1.8% |
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2.0% |
7.0% |
8.9% |
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RoIC (after tax) |
0.9% |
2.5% |
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2.1% |
7.1% |
7.3% |
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Thomson Reuters consensus HEPS, ZAc |
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31 |
115 |
372 |
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RoE |
1.5% |
1.0% |
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0.4% |
5.9% |
7.3% |
DPS declared, ZAc |
0 |
0 |
0 |
0 |
0 |
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Cash flow statement |
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Underlying EBIT |
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Operating cash flow |
602 |
1,063 |
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1,195 |
1,152 |
2,150 |
BRPM |
241 |
312 |
373 |
347 |
359 |
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Capex |
-1,126 |
-2,160 |
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-3,164 |
-1,936 |
-1,101 |
EBIT margin |
7% |
9% |
11% |
12% |
12% |
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Other |
385 |
611 |
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179 |
-976 |
-1,058 |
Styldrift |
0 |
0 |
-0 |
1,156 |
1,735 |
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FCF |
-139 |
-486 |
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-1,789 |
-1,760 |
-9 |
EBIT margin |
- |
- |
- |
26% |
32% |
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Equity shareholders' cash |
-82 |
-435 |
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-1,768 |
-1,918 |
-188 |
EBIT |
241 |
312 |
372 |
1,503 |
2,094 |
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Dividends and share buy backs |
0 |
0 |
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355 |
0 |
0 |
Income statement ratios |
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Movement in net debt |
-82 |
-435 |
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-1,413 |
-1,918 |
-188 |
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Cash flow ratios |
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EBITDA margin |
17% |
19% |
21% |
29% |
33% |
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EBIT margin |
7% |
9% |
11% |
20% |
25% |
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Working capital turnover, days |
16 |
-11 |
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-56 |
22 |
30 |
HEPS growth |
204% |
-35% |
-63% |
1729% |
50% |
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FCF yield |
-1.3% |
-5.0% |
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-17.5% |
-19.7% |
-0.1% |
Dividend payout ratio |
0% |
0% |
0% |
0% |
0% |
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Equity shareholders' yield |
-1.0% |
-6.8% |
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-32.6% |
-32.1% |
-3.2% |
Input assumptions |
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Capex/EBITDA |
203.7% |
320.8% |
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429.4% |
90.8% |
39.6% |
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Cash conversion |
-0.5x |
-4.0x |
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-41.3x |
-2.4x |
-0.2x |
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Platinum, $/oz |
988 |
950 |
880 |
870 |
1,070 |
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Valuation |
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Palladium, $/oz |
614 |
871 |
1,030 |
1,216 |
1,088 |
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Rhodium, $/oz |
694 |
1,108 |
2,218 |
2,379 |
2,163 |
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Calculation of target price |
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ZARmn |
ZAR/sh |
USD/ZAR |
14.70 |
13.31 |
13.24 |
14.31 |
14.14 |
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BRPM |
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2,223 |
10.7 |
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Styldrift |
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2,856 |
13.7 |
Platinum sales volumes, koz |
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Enterprise value |
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5,080 |
24.4 |
BRPM volumes |
177 |
183 |
168 |
130 |
120 |
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Investments as at 31 December 2017 |
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36 |
0.2 |
Styldrift volumes |
0 |
0 |
0 |
190 |
220 |
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Net debt as at 31 December 2017 |
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401 |
1.9 |
Group total |
177 |
183 |
168 |
320 |
340 |
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Cash used in share buy-backs during 2018E |
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0 |
0.0 |
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Volume growth |
-0.1% |
3.3% |
-8.0% |
90.4% |
6.3% |
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Minority interest |
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0 |
0.0 |
3PGM breakeven price, $/oz |
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Convertible debt conversion cost at ZAR43/share |
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-276 |
-1.3 |
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718 |
682 |
647 |
652 |
651 |
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Equity value |
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5,240 |
25.2 |
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BRPM |
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Rounded to |
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25.0 |
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Styldrift |
- |
- |
- |
547 |
456 |
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Current share price on 1/2/2019 |
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28.8 |
Group (mined production) breakeven |
718 |
682 |
647 |
588 |
525 |
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Expected share price return |
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-13.0% |
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Plus: expected dividend yield |
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0.0% |
RBPlats - Divisional DCF valuation |
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Total implied one-year return |
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-13.0% |
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Share price range, ZAR: |
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Styldrift |
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12-month high |
38 |
12-month low |
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15 |
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56% |
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Price move since high |
-24.3% Price move since low |
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91.7% |
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Calculation of WACC |
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WACC |
15.4% |
Cost of debt |
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10.0% |
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Risk-free rate |
9.0% |
Tax rate |
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28% |
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Equity risk premium |
6.0% After-tax cost of debt |
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7.2% |
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Beta |
1.30 |
Debt weighting |
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15% |
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Cost of equity |
16.8% |
Terminal growth rate |
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6.0% |
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Valuation ratios |
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Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
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BRPM |
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P/E multiple |
47.7x |
58.5x |
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125.6x |
7.6x |
5.1x |
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44% |
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Dividend yield |
0.0% |
0.0% |
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0.0% |
0.0% |
0.0% |
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EV/EBITDA |
19.5x |
14.4x |
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13.9x |
4.2x |
3.3x |
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P/B |
0.7x |
0.6x |
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0.5x |
0.4x |
0.4x |
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NAV per share, ZAR |
58 |
55 |
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53 |
75 |
81 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
68