vk.com/id446425943
Anglo American Platinum – HOLD
Renaissance Capital
14 January 2019
Metals & Mining
Figure 108: Anglo American Platinum, ZARmn (unless otherwise stated)
|
|
|
|
Anglo American Platinum |
AMSJ.J |
Target price, ZAR: |
540 |
Market capitalisation, ZARmn: |
147,157 |
Last price, ZAR: |
549 |
Enterprise value, ZARmn: |
148,464 |
Potential 12-month return: |
0.5% |
Dec-YE |
2016 |
2017 |
|
2018E |
2019E |
2020E |
Income statement |
|
|
|
|
|
|
Revenue |
61,944 |
65,671 |
|
74,708 |
85,729 |
88,974 |
EBITDA |
9,168 |
12,367 |
|
16,216 |
20,511 |
21,897 |
EBIT |
4,501 |
8,274 |
|
12,065 |
16,033 |
17,227 |
Net interest |
-1,153 |
-951 |
|
-95 |
-213 |
87 |
Taxation |
-364 |
-1,616 |
|
-3,022 |
-4,904 |
-5,367 |
Equity accounted income |
-115 |
-362 |
|
48 |
0 |
0 |
Attributable profit |
552 |
1,945 |
|
6,844 |
10,848 |
11,854 |
Headline earnings |
1,867 |
3,886 |
|
8,027 |
10,848 |
11,854 |
HEPS, ZAc |
713 |
1,482 |
|
3,018 |
4,037 |
4,412 |
Thomson Reuters consensus HEPS, ZAc |
|
|
|
2,610 |
3,009 |
3,608 |
DPS declared, ZAc |
0 |
349 |
|
895 |
1,211 |
1,323 |
Breakdown of EBIT |
4,785 |
7,029 |
|
7,894 |
9,938 |
10,090 |
Mogalakwena |
|
|||||
EBIT margin |
34% |
44% |
|
41% |
46% |
46% |
Amandelbult |
1,293 |
1,699 |
|
3,208 |
4,570 |
5,195 |
EBIT margin |
12% |
15% |
|
23% |
30% |
33% |
Unki |
22 |
369 |
|
351 |
545 |
656 |
EBIT margin |
1% |
15% |
|
14% |
19% |
22% |
JV operations |
626 |
659 |
|
1,834 |
2,684 |
2,479 |
EBIT margin |
10% |
11% |
|
23% |
26% |
24% |
Third party |
1,319 |
2,104 |
|
2,722 |
3,068 |
3,175 |
EBIT margin |
9% |
8% |
|
9% |
9% |
8% |
Other |
-3,544 |
-3,586 |
|
-3,945 |
-4,772 |
-4,368 |
EBIT |
4,501 |
8,274 |
|
12,065 |
16,033 |
17,227 |
Income statement ratios |
|
|
|
|
|
|
EBITDA margin |
15% |
19% |
|
22% |
24% |
25% |
EBIT margin |
7% |
13% |
|
16% |
19% |
19% |
HEPS growth |
1626% |
108% |
|
104% |
34% |
9% |
Dividend payout ratio |
0% |
47% |
|
35% |
30% |
30% |
Input assumptions |
|
|
|
|
|
|
Platinum, $/oz |
988 |
950 |
|
880 |
870 |
1,070 |
Palladium, $/oz |
614 |
871 |
|
1,030 |
1,216 |
1,088 |
Rhodium, $/oz |
694 |
1,108 |
|
2,218 |
2,379 |
2,163 |
USD/ZAR |
14.70 |
13.31 |
|
13.24 |
14.31 |
14.14 |
Sales volumes, koz |
|
|
|
|
|
|
Mined platinum |
1,809 |
1,389 |
|
1,328 |
1,399 |
1,369 |
Third party platinum |
652 |
1,066 |
|
1,172 |
1,201 |
1,221 |
Total platinum sales |
2,416 |
2,505 |
|
2,466 |
2,600 |
2,591 |
Volume growth |
-2.2% |
3.7% |
|
-1.6% |
5.4% |
-0.4% |
3PGM breakeven price, $/oz |
|
|
|
|
|
|
Mogalakwena breakeven |
530 |
430 |
|
533 |
492 |
517 |
Amandelbult breakeven |
684 |
761 |
|
727 |
712 |
704 |
Unki breakeven |
699 |
660 |
|
751 |
775 |
770 |
JV operations breakeven |
702 |
788 |
|
746 |
770 |
837 |
Group (mined production) breakeven |
754 |
744 |
|
744 |
743 |
756 |
Contribution to FY18E underlying EBITDA |
|
|
|
|
|
|
Third party |
Union |
|
|
Amandelbult |
|
|
16% |
|
|
|
19% |
|
|
1% |
|
|
|
|
||
Kroondal |
|
|
|
|
|
|
|
|
|
|
|
|
|
6% |
|
|
|
|
|
|
Mototolo |
|
|
|
|
|
|
3% |
|
|
|
|
|
|
Modikwa |
|
Mogalakwena |
|
|
||
3% |
|
|
49% |
|
|
|
Unki
3%
Dec-YE |
|
|
|
|
2018E |
2019E |
2020E |
|
2016 |
2017 |
|
||||
Balance sheet |
|
|
|
|
|
|
|
Net operating assets |
|
44,516 |
40,109 |
|
44,433 |
46,051 |
47,684 |
Investments |
|
2,585 |
2,725 |
|
2,341 |
2,388 |
2,436 |
Equity |
|
40,016 |
41,527 |
|
46,773 |
54,609 |
63,048 |
Minority interest |
|
-234 |
-526 |
|
259 |
259 |
259 |
Net debt |
|
7,319 |
1,833 |
|
-258 |
-6,429 |
-13,187 |
Balance sheet ratios |
|
|
|
|
|
|
|
Gearing (net debt/(net debt+equity)) |
|
15.5% |
4.2% |
|
-0.6% |
-13.3% |
-26.4% |
Net debt to EBITDA |
|
0.8x |
0.1x |
|
0.0x |
-0.3x |
-0.6x |
RoCE |
|
8.1% |
16.6% |
|
24.1% |
30.0% |
31.2% |
RoIC (after tax) |
|
4.0% |
11.9% |
|
18.4% |
21.3% |
21.9% |
RoE |
|
4.7% |
9.5% |
|
18.2% |
21.4% |
20.1% |
Cash flow statement |
|
|
|
|
|
|
|
Operating cash flow |
|
11,030 |
9,486 |
|
12,597 |
16,644 |
17,092 |
Capex (net of disposals) |
|
-4,695 |
-4,744 |
|
-6,271 |
-6,523 |
-6,219 |
Other |
|
1,399 |
1,841 |
|
-3,267 |
-670 |
-622 |
FCF |
|
7,734 |
6,583 |
|
3,059 |
9,451 |
10,252 |
Equity shareholders' cash |
|
5,450 |
5,486 |
|
4,024 |
9,183 |
10,173 |
Dividends and share buy backs |
|
0 |
0 |
|
-1,933 |
-3,012 |
-3,415 |
Movement in net debt |
|
5,450 |
5,486 |
|
2,091 |
6,171 |
6,758 |
Cash flow ratios |
|
|
|
|
|
|
|
Working capital turnover, days |
|
49 |
52 |
|
51 |
46 |
47 |
FCF yield |
|
7.8% |
7.3% |
|
2.9% |
6.7% |
7.6% |
Equity shareholders' yield |
|
5.9% |
6.2% |
|
3.8% |
6.2% |
6.9% |
Capex/EBITDA |
|
44.9% |
36.0% |
|
37.7% |
30.2% |
27.2% |
Cash conversion |
|
2.9x |
1.4x |
|
0.5x |
0.8x |
0.9x |
Valuation |
|
|
|
|
|
|
|
SoTP DCF fair value and calculation of target price |
|
|
|
ZARmn |
ZAR/sh |
||
Union mine |
|
|
|
|
23 |
0 |
|
Amandelbult operations |
|
|
|
|
33,070 |
123 |
|
Mogalakwena mine |
|
|
|
|
103,614 |
386 |
|
Twickenham mine |
|
|
|
|
-428 |
-2 |
|
Unki mine |
|
|
|
|
6,793 |
25 |
|
Modikwa |
|
|
|
|
4,138 |
15 |
|
Mototolo |
|
|
|
|
3,561 |
13 |
|
Kroondal |
|
|
|
|
2,697 |
10 |
|
Third party sales |
|
|
|
|
8,857 |
33 |
|
Other |
|
|
|
|
-17,678 |
-66 |
|
Enterprise value |
|
|
|
|
144,648 |
540 |
|
Investments as at 31 December 2017 |
|
|
|
|
2,725 |
10 |
|
Net debt as at 31 December 2017 |
|
|
|
|
-1,833 |
-7 |
|
Cash used in share buy-backs during 2018E |
|
|
|
|
0 |
0 |
|
Equity value |
|
|
|
|
145,540 |
543 |
|
Rounded to |
|
|
|
|
|
540 |
|
Current share price on 7/1/2019 |
|
|
|
|
|
549.3 |
|
Expected share price return |
|
|
|
|
|
-1.7% |
|
Plus: expected dividend yield |
|
|
|
|
|
2.2% |
|
Total implied one-year return |
|
|
|
|
|
0.5% |
|
Share price range, ZAR: |
|
|
|
|
|
|
|
12-month high |
552 |
12-month low |
|
299 |
|||
Price move since high |
-0.6% |
Price move since low |
|
83.8% |
|||
Calculation of WACC |
|
|
|
|
|
|
|
WACC |
11.4% |
Cost of debt |
|
|
10.0% |
||
Risk-free rate |
9.0% |
Tax rate |
|
|
28% |
||
Equity risk premium |
4.0% |
After-tax cost of debt |
|
7.2% |
|||
Beta |
1.30 |
Debt weighting |
|
40% |
|||
Cost of equity |
14.2% |
Terminal growth rate |
|
6.0% |
|||
Valuation ratios |
|
|
|
|
|
|
|
Dec-YE |
|
2016 |
2017 |
|
2018E |
2019E |
2020E |
P/E multiple |
|
48.5x |
22.4x |
|
13.1x |
13.6x |
12.5x |
Dividend yield |
|
0.0% |
1.1% |
|
2.3% |
2.2% |
2.4% |
EV/EBITDA |
|
9.5x |
6.8x |
|
6.4x |
6.5x |
5.9x |
P/B |
|
2.3x |
2.1x |
|
2.3x |
2.7x |
2.3x |
NAV per share, ZAR |
|
149 |
155 |
|
174 |
204 |
235 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
73
vk.com/id446425943
Impala Platinum – BUY
Renaissance Capital
14 January 2019
Metals & Mining
Figure 109: Impala Platinum, ZARmn (unless otherwise stated)
Impala Platinum |
IMPJ.J |
Target price, ZAR: |
45 |
Market capitalisation, ZARmn: |
30,421 |
Last price, ZAR: |
38 |
Enterprise value, ZARmn: |
39,448 |
Potential 12-month return: |
19.9% |
Jun-YE |
2017 |
2018 |
2019E |
2020E |
2021E |
Income statement |
|
|
|
|
|
Revenue |
40,540 |
39,587 |
41,506 |
53,956 |
51,383 |
Underlying EBITDA |
3,622 |
5,884 |
8,743 |
9,933 |
11,658 |
Underlying EBIT |
-474 |
1,684 |
4,957 |
6,192 |
8,331 |
Net interest |
-400 |
-701 |
-614 |
-324 |
-37 |
Taxation |
2,461 |
2,042 |
-1,216 |
-1,643 |
-2,322 |
Minority interest in profit |
122 |
-114 |
-307 |
-352 |
-339 |
Attributable profit |
-7,976 |
-10,907 |
2,820 |
3,873 |
5,632 |
Headline earnings |
-983 |
-1,228 |
2,820 |
3,873 |
5,632 |
HEPS, ZAc |
-137 |
-171 |
392 |
539 |
784 |
Thomson Reuters consensus HEPS, ZAc |
|
|
189 |
272 |
410 |
DPS declared, ZAc |
0 |
0 |
0 |
0 |
0 |
Underlying EBIT |
-1,760 |
-1,083 |
1,576 |
2,126 |
4,245 |
Rustenburg lease |
|||||
EBIT margin |
-6% |
-4% |
5% |
6% |
13% |
Zimplats |
1,169 |
1,911 |
2,069 |
2,613 |
2,775 |
EBIT margin |
17% |
26% |
25% |
28% |
29% |
Marula |
-627 |
-6 |
220 |
172 |
-5 |
EBIT margin |
-39% |
0% |
8% |
6% |
0% |
Mimosa |
2 |
320 |
235 |
346 |
386 |
EBIT margin |
0% |
16% |
11% |
15% |
16% |
Two Rivers |
460 |
419 |
684 |
753 |
735 |
EBIT margin |
24% |
23% |
32% |
32% |
31% |
Other |
282 |
123 |
173 |
182 |
196 |
EBIT |
-474 |
1,684 |
4,957 |
6,192 |
8,331 |
Income statement ratios |
|
|
|
|
|
EBITDA margin |
9% |
15% |
21% |
18% |
23% |
EBIT margin |
-1% |
4% |
12% |
11% |
16% |
HEPS growth |
-1242% |
-25% |
329% |
37% |
45% |
Dividend payout ratio |
0% |
0% |
0% |
0% |
0% |
Input assumptions |
|
|
|
|
|
Platinum, $/oz |
988 |
940 |
820 |
970 |
1,134 |
Palladium, $/oz |
738 |
977 |
1,151 |
1,152 |
1,050 |
Rhodium, $/oz |
821 |
1,634 |
2,440 |
2,271 |
2,098 |
USD/ZAR |
13.60 |
12.85 |
14.25 |
14.25 |
14.09 |
Production volumes, koz |
|
|
|
|
|
Mined platinum |
1,121 |
1,048 |
1,159 |
1,144 |
1,004 |
Third party platinum |
244 |
241 |
180 |
180 |
180 |
Joint venture platinum |
165 |
180 |
145 |
149 |
149 |
Gross refined platinum |
1,530 |
1,468 |
1,484 |
1,473 |
1,333 |
Volume growth |
6.4% |
-4.0% |
1.1% |
-0.7% |
-9.5% |
3PGM breakeven price, $/oz |
|
|
|
|
|
Rustenburg lease breakeven |
1,071 |
1,183 |
1,066 |
1,123 |
982 |
Zimplats breakeven |
653 |
783 |
765 |
781 |
807 |
Marula breakeven |
1,201 |
970 |
962 |
1,053 |
1,158 |
Mimosa breakeven |
888 |
896 |
934 |
956 |
978 |
Two Rivers breakeven |
677 |
797 |
717 |
758 |
807 |
Group (mined production) breakeven |
895 |
959 |
902 |
941 |
876 |
Contribution to FY19E proportionately consolidated underlying EBITDA |
|
||||
Two Rivers |
|
|
|
|
|
10% |
|
|
|
Rustenburg Lease |
|
Mimosa |
|
|
|
||
6% |
|
|
|
46% |
|
IRS 1%
Zimplats
37%
Jun-YE |
|
|
|
|
2019E |
2020E |
2021E |
|
2017 |
2018 |
|
||||
Balance sheet |
|
|
|
|
|
|
|
Net operating assets |
|
51,832 |
45,914 |
|
44,722 |
45,490 |
46,964 |
Investments |
|
-929 |
326 |
|
333 |
339 |
346 |
Equity |
|
46,807 |
37,213 |
|
40,033 |
43,906 |
49,538 |
Minority interest |
|
2,425 |
2,380 |
|
2,380 |
2,380 |
2,380 |
Net debt (including finance leases) |
|
1,671 |
6,647 |
|
2,642 |
-457 |
-4,608 |
Balance sheet ratios |
|
|
|
|
|
|
|
Gearing (net debt/(net debt+equity)) |
|
3.4% |
15.2% |
|
6.2% |
-1.1% |
-10.3% |
Net debt to EBITDA |
|
0.5x |
1.1x |
|
0.3x |
0.0x |
-0.4x |
RoCE |
|
-0.8% |
3.2% |
|
10.5% |
13.1% |
17.3% |
RoIC (after tax) |
|
-8.5% |
-5.9% |
|
7.6% |
9.5% |
12.5% |
RoE |
|
-1.9% |
-2.9% |
|
7.3% |
9.2% |
12.1% |
Cash flow statement |
|
|
|
|
|
|
|
Operating cash flow |
|
-1,247 |
-1,256 |
|
9,436 |
7,810 |
8,031 |
Capex (net of disposals) |
|
-3,798 |
-5,106 |
|
-4,675 |
-4,119 |
-3,506 |
Other |
|
3,856 |
3,305 |
|
0 |
0 |
0 |
FCF |
|
-1,189 |
-3,057 |
|
4,761 |
3,690 |
4,525 |
Equity shareholders' cash |
|
846 |
-4,976 |
|
4,005 |
3,099 |
4,152 |
Dividends and share buy backs |
|
0 |
0 |
|
0 |
0 |
0 |
Movement in net debt |
|
846 |
-4,976 |
|
4,005 |
3,099 |
4,152 |
Cash flow ratios |
|
|
|
|
|
|
|
Working capital turnover, days |
|
58 |
81 |
|
49 |
48 |
60 |
FCF yield |
|
-2.9% |
-9.8% |
|
14.9% |
12.8% |
18.3% |
Equity shareholders' yield |
|
2.3% |
-22.3% |
|
14.8% |
11.5% |
15.4% |
Capex/EBITDA |
|
104.9% |
86.8% |
|
53.5% |
41.5% |
30.1% |
Cash conversion |
|
-0.9x |
4.1x |
|
1.4x |
0.8x |
0.7x |
Valuation |
|
|
|
|
|
|
|
SoTP DCF fair value and calculation of target price |
|
|
|
ZARmn |
ZAR/sh |
||
Rustenburg lease |
|
|
|
|
19,754 |
27.5 |
|
Zimplats (effective interest = 87%) |
|
|
|
|
14,791 |
20.6 |
|
Marula (effective interest = 73%) |
|
|
|
|
-279 |
-0.4 |
|
Afplats (effective interest = 74%) |
|
|
|
|
0 |
0.0 |
|
IRS (third party only) |
|
|
|
|
205 |
0.3 |
|
Mimosa (effective interest = 50%) |
|
|
|
|
1,700 |
2.4 |
|
Two Rivers (effective interest = 46%) |
|
|
|
|
4,801 |
6.7 |
|
Chrome operations |
|
|
|
|
404 |
0.6 |
|
Enterprise value |
|
|
|
|
41,375 |
57.6 |
|
Investments as at 30 June 2018 |
|
|
|
|
326 |
0.5 |
|
Net debt as at 30 June 2018 |
|
|
|
|
-6,647 |
-9.2 |
|
Cash used in share buy-backs during 2019E |
|
|
|
|
0 |
0.0 |
|
Convertible debt conversion cost at ZAR50/share |
|
|
|
-1,585 |
-2.2 |
||
Anticipated indigenization discount of Zimplats and Mimosa |
|
-841 |
-1.2 |
||||
Equity value |
|
|
|
|
32,628 |
45.4 |
|
Rounded to |
|
|
|
|
|
45.0 |
|
Current share price on 7/1/2019 |
|
|
|
|
|
37.5 |
|
Expected share price return |
|
|
|
|
|
19.9% |
|
Plus: expected dividend yield |
|
|
|
|
|
0.0% |
|
Total implied one-year return |
|
|
|
|
|
19.9% |
|
Share price range, ZAR: |
|
|
|
|
|
|
|
12-month high |
39 |
12-month low |
|
16 |
|||
Price move since high |
-3.2% |
Price move since low |
|
140.5% |
|||
Calculation of WACC |
|
|
|
|
|
|
|
WACC |
15.4% |
Cost of debt |
|
|
10.0% |
||
Risk-free rate |
9.0% |
Tax rate |
|
|
28% |
||
Equity risk premium |
6.0% |
After-tax cost of debt |
|
7.2% |
|||
Beta |
1.30 |
Debt weighting |
|
15% |
|||
Cost of equity |
16.8% |
Terminal growth rate |
|
0.0% |
|||
Valuation ratios |
|
|
|
|
|
|
|
Jun-YE |
|
2017 |
2018 |
|
2019E |
2020E |
2021E |
P/E multiple |
|
-36.6x |
-18.2x |
|
9.6x |
7.0x |
4.8x |
Dividend yield |
|
0.0% |
0.0% |
|
0.0% |
0.0% |
0.0% |
EV/EBITDA |
|
11.3x |
5.3x |
|
3.7x |
2.9x |
2.1x |
P/B |
|
0.8x |
0.6x |
|
0.7x |
0.6x |
0.5x |
NAV per share, ZAR |
|
64 |
52 |
|
56 |
61 |
69 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
74
vk.com/id446425943
Lonmin – SELL
Renaissance Capital
14 January 2019
Metals & Mining
Figure 110: Lonmin, $mn (unless otherwise stated)
|
|
|
|
Lonmin |
LONJ.J |
Target price, ZAR: |
7.0 |
Market capitalisation, $mn: |
187 |
Last price, ZAR: |
9.1 |
Enterprise value, $mn: |
73 |
Potential 12-month return: |
-23.3% |
Sep-YE |
2017 |
2018 |
2019E |
2020E |
2021E |
Income statement |
|
|
|
|
|
Revenue |
1,166 |
1,345 |
1,340 |
1,155 |
1,123 |
Underlying EBITDA |
38 |
115 |
231 |
144 |
73 |
Underlying EBIT |
-28 |
101 |
212 |
121 |
47 |
Net interest |
-88 |
-30 |
-13 |
-5 |
-6 |
Taxation |
18 |
-6 |
-56 |
-32 |
-11 |
Minority interest profit |
156 |
-20 |
-20 |
-11 |
-4 |
Attributable profit |
-998 |
42 |
124 |
72 |
25 |
Underlying earnings |
-103 |
63 |
124 |
72 |
25 |
Underlying EPS, USc |
-37 |
22 |
44 |
25 |
9 |
- ZAR |
-4.87 |
3.06 |
6.30 |
3.60 |
1.30 |
Thomson Reuters consensus HEPS, ZAR |
|
|
1.61 |
1.70 |
1.72 |
DPS declared, USc |
0 |
0 |
0 |
0 |
0 |
Income statement ratios |
|
|
|
|
|
EBITDA margin |
3% |
9% |
17% |
12% |
6% |
EBIT margin |
-2% |
8% |
16% |
10% |
4% |
EPS growth |
-3% |
161% |
97% |
-42% |
-64% |
Dividend payout ratio |
0% |
0% |
0% |
0% |
0% |
Input assumptions |
|
|
|
|
|
Platinum, $/oz |
955 |
905 |
840 |
1,020 |
1,149 |
Palladium, $/oz |
794 |
990 |
1,212 |
1,120 |
1,045 |
Rhodium, $/oz |
927 |
1,957 |
2,435 |
2,217 |
2,089 |
USD/ZAR |
13.38 |
13.07 |
14.31 |
14.20 |
14.11 |
Breakeven price, $/3PGMoz |
927 |
992 |
967 |
1,096 |
1,207 |
Platinum volumes, koz |
|
|
|
|
|
Metal in concentrate |
644 |
629 |
640 |
520 |
500 |
Gross refined |
688 |
666 |
658 |
538 |
518 |
Sales |
706 |
676 |
658 |
538 |
518 |
Volume growth |
-4.0% |
-4.3% |
-2.7% |
-18.2% |
-3.7% |
Balance sheet |
|
|
|
|
|
Net operating assets |
363 |
440 |
581 |
660 |
745 |
Investments less rehab provision |
-100 |
-97 |
-97 |
-97 |
-97 |
Equity |
685 |
757 |
881 |
952 |
978 |
Minority interest |
-323 |
-300 |
-280 |
-269 |
-265 |
Net debt |
-99 |
-114 |
-117 |
-121 |
-65 |
Balance sheet ratios |
|
|
|
|
|
Gearing (net debt/(net debt+equity)) |
-16.9% |
-17.7% |
-15.2% |
-14.6% |
-7.1% |
Net debt to EBITDA |
-2.6x |
-1.0x |
-0.5x |
-0.8x |
-0.9x |
RoCE |
-2.1% |
12.0% |
41.5% |
19.5% |
6.6% |
RoIC (after tax) |
-4.6% |
9.9% |
29.9% |
14.0% |
4.8% |
RoE |
-8.8% |
8.7% |
15.1% |
7.8% |
2.6% |
|
|
|
|
|
|
Sep-YE |
|
|
|
2019E |
2020E |
2021E |
2017 |
2018 |
|
||||
Cash flow statement |
|
|
|
|
|
|
Operating cash flow |
79 |
140 |
|
117 |
115 |
51 |
Capex (net of disposals) |
-100 |
-73 |
|
-110 |
-110 |
-102 |
Other |
20 |
-34 |
|
4 |
4 |
0 |
FCF |
-1 |
33 |
|
12 |
8 |
-52 |
Equity shareholders' cash |
-70 |
11 |
|
3 |
4 |
-56 |
Dividends and share buy backs |
0 |
0 |
|
0 |
0 |
0 |
Movement in net debt |
-70 |
11 |
|
3 |
4 |
-56 |
Cash flow ratios |
31 |
21 |
|
36 |
41 |
45 |
Working capital turnover, days |
|
|||||
FCF yield |
0% |
45% |
|
17% |
13% |
-43% |
Equity shareholders' yield |
-17% |
6% |
|
1% |
2% |
-30% |
Capex/EBITDA |
263% |
63% |
|
47% |
77% |
141% |
Cash conversion |
0.7x |
0.2x |
|
0.0x |
0.1x |
-2.2x |
Valuation |
|
|
|
|
|
|
Calculation of target price |
|
|
|
|
|
ZAR/sh |
DCF fair value per share |
|
|
|
|
|
-0.3 |
Smelting and refining value per share |
|
|
|
|
|
7.0 |
Total value per share |
|
|
|
|
|
6.7 |
Rounded to |
|
|
|
|
|
7.0 |
Current share price on 7/1/2019 |
|
|
|
|
|
9.1 |
Expected share price return |
|
|
|
|
|
-23.3% |
Plus: expected dividend yield |
|
|
|
|
|
0.0% |
Total implied one-year return |
|
|
|
|
|
-23.3% |
Implied Lonmin share price based on Sibanye's proposed offer |
|
|
ZAR/sh |
|||
At share exchange ratio of 0.967 and assuming market values on 7/1/2019 |
|
10.1 |
||||
Share price range, ZAR: |
|
|
|
|
|
|
12-month high |
15 |
12-month low |
|
7 |
||
Price move since high |
-41.0% Price move since low |
|
40.5% |
|||
Calculation of WACC |
|
|
|
|
|
|
WACC |
11.0% |
Cost of debt |
|
|
5.0% |
|
Risk-free rate |
4.0% |
Tax rate |
|
|
28% |
|
Equity risk premium |
6.0% |
After-tax cost of debt |
|
3.6% |
||
Beta |
1.30 |
Debt weighting |
|
10% |
||
Cost of equity |
11.8% |
Terminal growth rate |
|
0.0% |
||
Valuation ratios |
|
|
|
|
|
|
Sep-YE |
2017 |
2018 |
|
2019E |
2020E |
2021E |
P/E multiple |
-4.1x |
3.0x |
|
1.5x |
2.6x |
7.3x |
Dividend yield |
0.0% |
0.0% |
|
0.0% |
0.0% |
0.0% |
EV/EBITDA |
0.0x |
-2.0x |
|
-0.9x |
-1.4x |
-2.0x |
P/B |
0.6x |
0.2x |
|
0.2x |
0.2x |
0.2x |
NAV per share, ZAR |
32 |
35 |
|
45 |
48 |
49 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
75
vk.com/id446425943
Northam Platinum – SELL
Renaissance Capital
14 January 2019
Metals & Mining
Figure 111: Northam Platinum, ZARmn (unless otherwise stated)
|
|
|
|
Northam |
NHMJ.J |
Target price, ZAR: |
40 |
Market capitalisation, ZARmn: |
21,574 |
Last price, ZAR: |
43 |
Enterprise value, ZARmn: |
27,168 |
Potential 12-month return: |
-6.1% |
Jun-YE |
|
2017 |
2018 |
2019E |
2020E |
2021E |
Income statement |
|
|
|
|
|
|
Revenue |
|
6,865 |
7,553 |
14,328 |
14,251 |
15,956 |
Underlying EBITDA |
|
1,068 |
1,268 |
3,136 |
4,027 |
4,794 |
Underlying EBIT |
|
616 |
826 |
2,470 |
3,410 |
4,154 |
Equity accounted income |
|
5 |
4 |
0 |
0 |
0 |
Net interest |
|
-984 |
-1,137 |
-1,467 |
-1,623 |
-1,800 |
Other operating items |
|
-57 |
-164 |
-331 |
-342 |
-356 |
Taxation |
|
-212 |
-232 |
-564 |
-834 |
-1,050 |
Minority interest in profit |
|
0 |
0 |
0 |
0 |
0 |
Attributable profit |
|
-634 |
-702 |
108 |
611 |
948 |
Headline earnings |
|
-635 |
-699 |
108 |
611 |
948 |
HEPS, ZAc |
|
-182 |
-201 |
31 |
175 |
271 |
Normalised HEPS, ZAc |
|
78 |
83 |
288 |
424 |
533 |
Thomson Reuters consensus HEPS, ZAc |
|
|
-70 |
54 |
365 |
|
DPS declared, ZAc |
|
0 |
0 |
0 |
0 |
0 |
Underlying EBIT |
|
177 |
298 |
1,044 |
1,420 |
1,468 |
Zondereinde operations |
|
|||||
EBIT margin |
|
4% |
7% |
11% |
17% |
17% |
Booysendal operations |
|
437 |
525 |
1,427 |
1,990 |
2,687 |
EBIT margin |
|
17% |
17% |
31% |
33% |
37% |
EBIT |
|
616 |
826 |
2,470 |
3,410 |
4,154 |
Income statement ratios |
|
|
|
|
|
|
EBITDA margin |
|
16% |
17% |
22% |
28% |
30% |
EBIT margin |
|
9% |
11% |
17% |
24% |
26% |
HEPS growth |
|
-29% |
-10% |
115% |
466% |
55% |
Dividend payout ratio |
|
0% |
0% |
0% |
0% |
0% |
Input assumptions |
|
|
|
|
|
|
Platinum, $/oz |
|
988 |
940 |
820 |
970 |
1,134 |
Palladium, $/oz |
|
738 |
977 |
1,151 |
1,152 |
1,050 |
Rhodium, $/oz |
|
821 |
1,634 |
2,440 |
2,271 |
2,098 |
$/ZAR |
|
13.60 |
12.85 |
14.25 |
14.25 |
14.09 |
3PGM sales volumes (excl. third party) |
|
|
|
|
|
|
Zondereinde operations |
lumes |
230 |
178 |
469 |
347 |
347 |
Booysendal operations |
lumes |
188 |
199 |
264 |
331 |
397 |
Group |
|
418 |
377 |
732 |
678 |
744 |
Volume growth |
|
-0.5% |
-9.7% |
94.2% |
-7.4% |
9.7% |
3PGM breakeven price, $/oz |
832 |
921 |
867 |
867 |
902 |
|
Zondereinde operations |
|
|||||
Booysendal operations |
|
653 |
741 |
653 |
700 |
697 |
Group (mined production) |
751 |
826 |
790 |
785 |
792 |
|
Contribution to FY19E underlying EBITDA
Jun-YE |
|
2017 |
2018 |
2019E |
2020E |
2021E |
Balance sheet |
|
|
|
|
|
|
Net operating assets |
|
15,261 |
19,650 |
19,986 |
20,817 |
21,751 |
Investments |
|
8 |
0 |
0 |
0 |
0 |
Equity |
|
8,092 |
7,387 |
7,495 |
8,105 |
9,054 |
Minority interest |
|
0 |
0 |
0 |
0 |
0 |
Net debt |
|
7,177 |
12,263 |
12,491 |
12,711 |
12,698 |
Balance sheet ratios |
|
|
|
|
|
|
Gearing (net debt/(net debt+equity)) |
|
47.0% |
62.4% |
62.5% |
61.1% |
58.4% |
Net debt to EBITDA |
|
6.7x |
9.7x |
4.0x |
3.2x |
2.6x |
RoCE |
|
3.9% |
4.4% |
11.4% |
15.2% |
17.8% |
RoIC (after tax) |
|
4.2% |
5.9% |
10.8% |
12.5% |
14.0% |
RoE |
|
-7.5% |
-9.0% |
1.5% |
7.8% |
11.1% |
Cash flow statement |
|
|
|
|
|
|
Operating cash flow |
|
934 |
225 |
3,585 |
3,482 |
3,728 |
Capex (net of disposals) |
|
-1,645 |
-3,778 |
-2,050 |
-1,762 |
-1,572 |
Other |
|
-433 |
-413 |
-331 |
-342 |
-356 |
FCF |
|
-1,143 |
-3,966 |
1,205 |
1,379 |
1,800 |
Equity shareholders' cash |
|
-1,127 |
-3,980 |
1,115 |
1,314 |
1,766 |
Dividends and share buy backs |
|
0 |
0 |
0 |
0 |
0 |
Non-cash increase in debt |
|
-1,017 |
-1,107 |
-1,343 |
-1,534 |
-1,753 |
Movement in net debt |
|
-2,144 |
-5,086 |
-228 |
-220 |
14 |
Cash flow ratios |
|
58 |
118 |
47 |
46 |
45 |
Working capital days |
|
|||||
FCF yield |
|
-4.8% |
-14.3% |
4.4% |
5.0% |
6.5% |
Equity shareholders' yield |
|
-6.7% |
-25.7% |
7.5% |
8.8% |
11.9% |
Capex/EBITDA |
|
154.0% |
297.9% |
65.4% |
43.8% |
32.8% |
Cash conversion |
|
1.8x |
5.7x |
10.3x |
2.2x |
1.9x |
Valuation |
|
|
|
|
|
|
SoTP DCF fair value and calculation of target price |
|
|
ZARmn |
ZAR/sh |
||
Zondereinde operations |
|
|
|
8,301 |
23.7 |
|
Booysendal operations |
|
|
|
18,020 |
51.5 |
|
Other |
|
|
|
-184 |
-0.5 |
|
Enterprise value |
|
|
|
26,137 |
74.7 |
|
Investments as at 30 June 2018 |
|
|
|
0 |
0.0 |
|
Net debt as at 30 June 2018 |
|
|
|
-12,263 |
-35.1 |
|
Cash used in share buy-backs during 2019E |
|
|
|
0 |
0.0 |
|
Minority interest |
|
|
|
0 |
0.0 |
|
Equity value |
|
|
|
13,874 |
39.7 |
|
Rounded to |
|
|
|
|
40 |
|
Current share price on 7/1/2019 |
|
|
|
|
42.6 |
|
Expected share price return |
|
|
|
|
-6.1% |
|
Plus: expected dividend yield |
|
|
|
|
0.0% |
|
Total implied one-year return |
|
|
|
|
-6.1% |
|
Share price range, ZAR:
|
|
|
12-month high |
60 |
12-month low |
|
32 |
||
|
|
|
Price move since high |
-29.2% Price move since low |
|
34.6% |
|||
|
|
|
Calculation of WACC |
|
|
|
|
|
|
|
|
Zondereinde |
WACC |
14.5% |
Cost of debt |
|
|
12.5% |
|
|
|
Risk-free rate |
9.0% |
Tax rate |
|
|
28% |
||
|
|
45% |
|
|
|||||
|
|
Equity risk premium |
6.0% |
After-tax cost of debt |
|
9.0% |
|||
|
|
|
|
||||||
Booysendal |
|
Beta |
1.3 |
Debt weighting |
|
30% |
|||
|
Cost of equity |
16.8% |
Terminal growth rate |
|
6.0% |
||||
55% |
|
|
|||||||
|
|
|
Valuation ratios |
|
|
|
|
|
|
|
|
|
Jun-YE |
2017 |
2018 |
|
2019E |
2020E |
2021E |
|
|
|
P/E multiple |
-26.4x |
-22.1x |
|
138.1x |
24.4x |
15.7x |
|
|
|
Normalised P/E multiple |
61.5x |
53.5x |
|
14.8x |
10.0x |
8.0x |
|
|
|
Dividend yield |
0.0% |
0.0% |
|
0.0% |
0.0% |
0.0% |
|
|
|
EV/EBITDA |
22.4x |
21.9x |
|
8.7x |
6.9x |
5.8x |
|
|
|
P/B |
2.1x |
2.1x |
|
2.0x |
1.8x |
1.6x |
|
|
|
NAV per share, ZAR |
23 |
21 |
|
21 |
23 |
26 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
76