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SA PGM Stocks

Feb. 29, 2024
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Josh Viljoen
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Josh Viljoen

What's your pick of the basket?

 

SA PGM stocks have  had a rough ride 2023 as PGM prices have come under great pressure due to a weak demand for the precious metals.

 

If you want to position yourself in this sector it is important to know who the players are and which PGM share offers the best value. Year to date all of the JSE PGM counters are down however some have been significantly worse off than others.

 

Anglo American Platinum and Impala Platinum have been hit the hardest are both down 52% YTD, Sibanye and Impala have also felt the heat are down 31% and 29% respectively. Small cap miner Tharisa has been the most resilient as is only down 11% on the year. 

 

But how do these companies compare relative to one on a valuation and fundamental basis?

 

Looking firstly at an enterprise value to EBITDA multiple Tharisa and Impala are the cheapest, whilst Northam is the most expense.

 

  1. Tharisa: 1.04
  2. Impala: 1.31
  3. Anglo: 2.13
  4. Sibanye: 2.18
  5. Northam: 4.71

 

Looking at the price to free cash flow tells a similar story the EV / EBITDA multiple with Tharisa screening the cheapest whilst Northam again looks the most fully valued. 

 

  1. Tharisa: 1.59
  2. Impala: 3.88
  3. Sibanye: 4.86
  4. Anglo: 6.82
  5. Northam: 13.51

 

When looking at the price to basic earnings per share of the PGM basket of stocks we can see again that Tharisa looks the cheapest by a country mile whilst Northam again looks richly priced.

 

  1. Tharisa: 2.12
  2. Impala: 4.70
  3. Sibanye: 6.87
  4. Anglo: 7.63
  5. Northam: 19.17

 

In terms of price to tangible book value per share Tharisa is the only pick of the bunch trading to a discount to it's tangible book value.  Anglo on the other hand is trading at a large premium to tangible book value.

 

Looking at balance sheet health Impala Sibanye both have strong current ratios above 3.0, Tharisa is still healthy at 2.23 and Anglo and Northam falling behind at 1.55 and 1.31 respectively.

 

Looking at balance sheet leverage Anglo and Impala are both practically debt free. Tharisa has a low to equity ratio of 10%, Sibanye at 25% and Northam at 46%.

 

It should come as no surprise to you based on the metrics shown in the table that Tharisa is my pick of the bunch. However given that is a relatively illiquid small cap miner I would pair it with a larger company for added diversification. My next choice would be either Anglo or Sibanye. I personally hold Sibanye as I like the growth prospects the battery metals investments provide, however Anglo's metrics do look compelling. 

 

The data used in the post has been obtained from Refinitv and this post is not intended to be financial advise but merely for informational purposes.

 

 

 

 

 

 


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