- •Contents
- •Revisions to our forecasts, TPs and ratings
- •Investment stance
- •Capital cycle favours rising returns
- •Comfortable balance sheets and supportive dividend potential
- •Value relative to other stocks
- •Yield potential through the cycle
- •Mid-cycle cash generation offers supportive yields
- •Where to hide if you are bearish
- •What to buy if you are bullish
- •Limited lives weighing down IRR
- •Yields should compensate for limited lives
- •Positive earnings momentum continues to support share prices
- •Commodity price revisions
- •Commodity section
- •Commodity section
- •Preference for base metals over steelmaking materials
- •Earnings revisions
- •Risks and catalysts
- •Peer comp charts
- •Commodity price and exchange rate forecasts
- •Important publications
- •African Rainbow Minerals
- •Alrosa
- •Anglo American
- •Assore
- •Exxaro
- •Glencore
- •Kumba Iron ore
- •NorNickel
- •Rio Tinto
- •Rusal
- •Vale
- •Gold Fields
- •Harmony
- •Polymetal
- •Anglo American Platinum
- •Lonmin
- •Northam
- •Royal Bafokeng Platinum
- •Sasol
- •Disclosures appendix
vk.com/id446425943
Royal Bafokeng Platinum – HOLD
Renaissance Capital
1 April 2019
Metals & Mining
Figure 134: Royal Bafokeng Platinum, ZARmn (unless otherwise noted)
|
|
|
|
Royal Bafokeng Platinum |
RBPJ.J |
Target price, ZAR: |
37 |
Market capitalisation, ZARmn: |
10,203 |
Last price, ZAR: |
35 |
Enterprise value, ZARmn: |
12,022 |
Potential 12-month return: |
5.8% |
Dec-YE |
2017 |
2018 |
2019E |
2020E |
2021E |
Income statement |
|
|
|
|
|
Revenue |
3,499 |
3,627 |
9,076 |
10,515 |
10,529 |
Underlying EBITDA |
628 |
644 |
2,479 |
4,328 |
4,103 |
Underlying EBIT |
267 |
274 |
2,009 |
3,700 |
3,358 |
Other operating items |
-106 |
-160 |
-143 |
-150 |
-222 |
Net interest |
85 |
74 |
-42 |
-144 |
-72 |
Taxation |
-84 |
-61 |
-511 |
-954 |
-858 |
Minority interest in profit |
-96 |
-100 |
0 |
0 |
0 |
Attributable profit |
-753 |
156 |
1,313 |
2,453 |
2,206 |
Headline earnings |
109 |
50 |
1,313 |
2,453 |
2,206 |
HEPS, ZAc |
56 |
25 |
530 |
963 |
866 |
Thomson Reuters consensus HEPS, ZAc |
|
|
171 |
303 |
366 |
DPS declared, ZAc |
0 |
0 |
0 |
0 |
0 |
Underlying EBIT |
267 |
274 |
931 |
1,048 |
737 |
BRPM |
|||||
EBIT margin |
8% |
8% |
22% |
26% |
21% |
Styldrift |
0 |
-1 |
1,077 |
2,653 |
2,621 |
EBIT margin |
- |
- |
22% |
41% |
37% |
EBIT |
267 |
274 |
2,009 |
3,700 |
3,358 |
Income statement ratios |
|
|
|
|
|
EBITDA margin |
18% |
18% |
27% |
41% |
39% |
EBIT margin |
8% |
8% |
22% |
35% |
32% |
HEPS growth |
-35% |
-56% |
2021% |
82% |
-10% |
Dividend payout ratio |
0% |
0% |
0% |
0% |
0% |
Input assumptions |
|
|
|
|
|
Platinum, $/oz |
950 |
880 |
843 |
900 |
966 |
Palladium, $/oz |
871 |
1,030 |
1,558 |
1,700 |
1,576 |
Rhodium, $/oz |
1,108 |
2,218 |
3,135 |
4,250 |
3,825 |
USD/ZAR |
13.31 |
13.24 |
14.28 |
14.40 |
14.49 |
Platinum sales volumes, koz |
|
|
|
|
|
BRPM volumes |
183 |
173 |
162 |
140 |
120 |
Styldrift volumes |
0 |
66 |
185 |
220 |
240 |
Group total |
183 |
239 |
347 |
360 |
360 |
Volume growth |
3.3% |
30.8% |
45.3% |
3.7% |
0.0% |
3PGM breakeven price, $/oz |
695 |
701 |
506 |
443 |
517 |
BRPM |
|||||
Styldrift |
- |
- |
590 |
284 |
327 |
Group (mined production) breakeven |
695 |
721 |
544 |
346 |
390 |
|
|
|
|
|
|
RBPlats - Divisional DCF valuation
Dec-YE |
|
2017 |
2018 |
2019E |
2020E |
2021E |
Balance sheet |
|
|
|
|
|
|
Net operating assets |
|
13,988 |
17,508 |
19,806 |
21,249 |
22,153 |
Investments |
|
36 |
40 |
41 |
42 |
42 |
Equity |
|
10,679 |
15,729 |
18,071 |
20,524 |
22,730 |
Minority interest |
|
3,745 |
0 |
0 |
0 |
0 |
Net debt |
|
-401 |
1,819 |
1,775 |
767 |
-536 |
Balance sheet ratios |
|
|
|
|
|
|
Gearing (net debt/(net debt+equity)) |
|
-3.9% |
10.4% |
8.9% |
3.6% |
-2.4% |
Net debt to EBITDA |
|
-0.6x |
2.8x |
0.7x |
0.2x |
-0.1x |
RoCE |
|
1.5% |
1.4% |
9.0% |
15.2% |
13.1% |
RoIC (after tax) |
|
2.3% |
-1.3% |
8.8% |
11.8% |
9.8% |
RoE |
|
1.0% |
0.4% |
7.8% |
12.7% |
10.2% |
Cash flow statement |
|
|
|
|
|
|
Operating cash flow |
|
574 |
-321 |
971 |
3,141 |
3,266 |
Capex |
|
-2,160 |
-3,459 |
-1,783 |
-1,024 |
-823 |
Other |
|
1,100 |
5,002 |
-143 |
-1,004 |
-1,089 |
FCF |
|
-486 |
1,221 |
-954 |
1,113 |
1,354 |
Equity shareholders' cash |
|
-435 |
-2,574 |
-985 |
1,009 |
1,302 |
Dividends and share buy backs |
|
0 |
355 |
1,029 |
0 |
0 |
Movement in net debt |
|
-435 |
-2,220 |
44 |
1,009 |
1,302 |
Cash flow ratios |
|
|
|
|
|
|
Working capital turnover, days |
|
128 |
169 |
126 |
121 |
121 |
FCF yield |
|
-5.0% |
17.5% |
-9.2% |
11.9% |
16.9% |
Equity shareholders' yield |
|
-6.8% |
-49.8% |
-11.5% |
11.8% |
15.2% |
Capex/EBITDA |
|
343.8% |
537.4% |
71.9% |
23.7% |
20.1% |
Cash conversion |
|
-4.0x |
-51.7x |
-0.8x |
0.4x |
0.6x |
Valuation |
|
|
|
|
|
|
Calculation of target price |
|
|
|
ZARmn |
ZAR/sh |
|
BRPM |
|
|
|
4,331 |
17.7 |
|
Styldrift |
|
|
|
5,677 |
23.2 |
|
Enterprise value |
|
|
|
10,008 |
40.9 |
|
Investments as at 31 December 2018 |
|
|
|
40 |
0.2 |
|
Net debt as at 31 December 2018 |
|
|
|
-1,819 |
-7.4 |
|
Cash used in share buy-backs during 2019E |
|
|
|
1,029 |
4.2 |
|
Minority interest |
|
|
|
0 |
0.0 |
|
Convertible debt conversion cost at ZAR43/share |
|
|
-276 |
-1.1 |
||
Equity value |
|
|
|
8,981 |
36.7 |
|
Rounded to |
|
|
|
|
37.0 |
|
Current share price on 26/3/2019 |
|
|
|
|
35.0 |
|
Expected share price return |
|
|
|
|
5.8% |
|
Plus: expected dividend yield |
|
|
|
|
0.0% |
|
Total implied one-year return |
|
|
|
|
5.8% |
|
Share price range, ZAR:
Styldrift |
12-month high |
37 |
12-month low |
|
14 |
||
Price move since high |
-5.5% |
Price move since low |
|
148.1% |
|||
57% |
|
||||||
|
Calculation of WACC |
|
|
|
|
|
|
|
WACC |
15.8% |
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 |
|
10% |
||
|
Cost of equity |
16.8% |
Terminal growth rate |
|
0.0% |
||
|
Valuation ratios |
|
|
|
|
|
|
|
Dec-YE |
2017 |
2018 |
|
2019E |
2020E |
2021E |
BRPM |
P/E multiple |
58.5x |
104.3x |
|
6.6x |
3.6x |
4.0x |
43% |
Dividend yield |
0.0% |
0.0% |
|
0.0% |
0.0% |
0.0% |
|
EV/EBITDA |
15.5x |
10.9x |
|
4.2x |
2.2x |
2.0x |
|
P/B |
0.6x |
0.3x |
|
0.5x |
0.4x |
0.4x |
|
NAV per share, ZAR |
55 |
79 |
|
74 |
84 |
93 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
88