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#THS @tharisa_sa
#1 My investment thesis -
- An emerging and highly exciting Platinum Group Metals (PGM) and Chrome producer listed in LSE & JSE.
- Yet to re-rate following the surge in PGM prices with exceptional margins
- Dividend payer with excellent growth prospsect.
#1 My investment thesis -
- An emerging and highly exciting Platinum Group Metals (PGM) and Chrome producer listed in LSE & JSE.
- Yet to re-rate following the surge in PGM prices with exceptional margins
- Dividend payer with excellent growth prospsect.
#2
FY20 Performance Snapshot
PGM Prod - 142koz @$1.7k/oz
Chrome Prod - 1.34Mt @ $!40/t
Revenue - $406m
EBITDA - $113.4m
FY21 Guidance
PGM - 160koz
Current price > $3k/oz
Chrome - 1.5Mt
Current price > $150/t
FY20 Performance Snapshot
PGM Prod - 142koz @$1.7k/oz
Chrome Prod - 1.34Mt @ $!40/t
Revenue - $406m
EBITDA - $113.4m
FY21 Guidance
PGM - 160koz
Current price > $3k/oz
Chrome - 1.5Mt
Current price > $150/t
#3
The ASIC for PGM is c<$700/oz whilst the ASIC for Chrome concentrate is <c$100/t.
At above ASIC and production figures,
FY21 Forecasts are as follows
PGM Revenues - c$480m
Chrome Revenues - c$225m
Total Rev - $705m vs $406(FY20). That's an increase of 73%.
The ASIC for PGM is c<$700/oz whilst the ASIC for Chrome concentrate is <c$100/t.
At above ASIC and production figures,
FY21 Forecasts are as follows
PGM Revenues - c$480m
Chrome Revenues - c$225m
Total Rev - $705m vs $406(FY20). That's an increase of 73%.
#4
PGM EBITDA expected at prices of $3k/oz for PGM is c$368m whilst the Chrome EBITDA expected at price of $150/t is c75m.
Thus a total EBITDA of c$443m vs ($113m in FY20), a c342% increase!
And this is where I think the market has not accurately grasped the opportunity here!
PGM EBITDA expected at prices of $3k/oz for PGM is c$368m whilst the Chrome EBITDA expected at price of $150/t is c75m.
Thus a total EBITDA of c$443m vs ($113m in FY20), a c342% increase!
And this is where I think the market has not accurately grasped the opportunity here!
#5
PGM sector is set to grow exponentially and through Tharisa investors get the opportunity and exposure to some of the most in demand metals especially Rhodium (51% of PGM production) with the price now c22,000/oz according to JMAT. That is single largest driver in PGM price.
PGM sector is set to grow exponentially and through Tharisa investors get the opportunity and exposure to some of the most in demand metals especially Rhodium (51% of PGM production) with the price now c22,000/oz according to JMAT. That is single largest driver in PGM price.
#6
44% (of remaining 49%) of the PGM prod is palladium and platinum - which have also seen substantial increases in prices over the last 1-2 years. In order to understand the value of the underlying PGM it is important to understand the use of Rhodium, Palladium & Platinum.
44% (of remaining 49%) of the PGM prod is palladium and platinum - which have also seen substantial increases in prices over the last 1-2 years. In order to understand the value of the underlying PGM it is important to understand the use of Rhodium, Palladium & Platinum.
#7
Rhodium
The main use for rhodium is in catalytic converters designed to clean vehicle emissions. It accomplishes this by reducing nitrogen oxide in exhaust gas. Without rhodium catalysts, the air in our cities would be much worse due to vehicle exhausts.
Rhodium
The main use for rhodium is in catalytic converters designed to clean vehicle emissions. It accomplishes this by reducing nitrogen oxide in exhaust gas. Without rhodium catalysts, the air in our cities would be much worse due to vehicle exhausts.
#8
The price of rhodium (due to its rare occurrence and availability) is increasing steadily on the back drop of increased car sales with lower emission requirements. Article below illustrates this. https://www.kitco.com/news/2020-01-08/Rhodium-prices-soar-on-demand-driven-story.html
The price of rhodium (due to its rare occurrence and availability) is increasing steadily on the back drop of increased car sales with lower emission requirements. Article below illustrates this. https://www.kitco.com/news/2020-01-08/Rhodium-prices-soar-on-demand-driven-story.html
#9
A snapshot from Tharisa's presentation shows how Rhodium's demand is outstripping supply, and how this imbalance will continue meaning sustained increase in prices.
A snapshot from Tharisa's presentation shows how Rhodium's demand is outstripping supply, and how this imbalance will continue meaning sustained increase in prices.
#10
Palladium & Platinum
Both these metals are also used in automotive catalytic converters, and as electrodes in medical equipment and have other uses but has more world supply than Rhodium hence the price increases haven't been as substantial - nevertheless sit near ATHs.
Palladium & Platinum
Both these metals are also used in automotive catalytic converters, and as electrodes in medical equipment and have other uses but has more world supply than Rhodium hence the price increases haven't been as substantial - nevertheless sit near ATHs.
#11
Quite often THS's Chrome production is over looked but that continues to provide significant revenues and margins making it a good leverage play. Chrome is what makes stainless steel. Despite low prices last year, Tharisa had 25% margins and expects c33% at current $150/t.
Quite often THS's Chrome production is over looked but that continues to provide significant revenues and margins making it a good leverage play. Chrome is what makes stainless steel. Despite low prices last year, Tharisa had 25% margins and expects c33% at current $150/t.
#12
What are the tailwinds that continue to make this an appealing investment?
- Relentless demand for PGMs due to increasing rules around emissions
- A dividend payer with a minimum of 15% NPAT
- Low debt that is to be paid off this year
- Open Pit mining so reduced ASIC
What are the tailwinds that continue to make this an appealing investment?
- Relentless demand for PGMs due to increasing rules around emissions
- A dividend payer with a minimum of 15% NPAT
- Low debt that is to be paid off this year
- Open Pit mining so reduced ASIC
#13
Further - the Vulcan asset construction is scheduled to start this year - funded internally and is set to increase Chrome production to 2Mtpa by end of 2022.
Further - the Vulcan asset construction is scheduled to start this year - funded internally and is set to increase Chrome production to 2Mtpa by end of 2022.
#14
With EV/EBITDA on FY21E basis of c1x, I would say this is substantially under valued and should be trading at multiples!
With a div policy of a min of 15% NPAT - I expect a div yield of c15-20% based on current mcap and numbers discussed.
Verdict: Strong Buy!
With EV/EBITDA on FY21E basis of c1x, I would say this is substantially under valued and should be trading at multiples!
With a div policy of a min of 15% NPAT - I expect a div yield of c15-20% based on current mcap and numbers discussed.
Verdict: Strong Buy!
Added a further c17k shares @ 130p averaging up. Rhodium price continues to increase ($22.4k/oz) and Tharisa continues to make significant margins.
A glorious re-rate is in order once seller clears. #THS
A glorious re-rate is in order once seller clears. #THS
