Sibanye-Stillwater ( $SSW )
Why I continue to buy the stock
2021 (6 month Financials)👇🏽
- Thread -
1/
Safety Framework
It’s difficult to ever go with no accidents, it is part of the industry, but let’s see how this translates into numbers.
2/
Revenue
(Up to June 30th, 2021)
Diversified like this:
1. 48% = SA PGM
2. 22% = SA Gold
3. 17% = US PGM
4. 13% = PGM recycling
PGM = Platinum Group Metals
*The red line indicates debt.
Debt is going down while revenue is going up.
#markets
3/
SA PGM operations
(Stellar performance )
All in sustaining costs (AISC)
- 10% reduction in AISC
- R14 billion in Free cash flow (FCF)
- 61% higher 4E PGM basket price
- Underground Production main contributor (risk)
4/
US PGM operations
(Stable performance)
- Flat production due to 3week stoppage (safety incident)
- lower volumes
- 12% increase in AISC
- R153 million FCF
5/
PGM Recycling
- An under recognized contribution of value
- R180million in net interest earned
- Increasing earnings
6/
SA Gold operations
(Solid performance)
- 29% higher production
- DRD Gold production 15% higher at an AISC cost of $1417
(margins increase as the price of gold increases, and protected to the downside a bit)
- 3% lower average Rand gold price
- 40% increase in earnings
7/
DRD GOLD
Sibanye-Stillwater owns a majority stake of 50.66% in DRD GOLD
They are listed on the JSE under the ticker $DRD and sell for R13.80
They too have declared a dividend of 40c a share.
8/
Income Statement
- Revenue totaling R89.5billion
- Cost of sales R48.1billion
- 53% gross margin
- R25.3billion in profit
- 28% net margin
- R9 billion paid in mining + tax
9/
Highlights
- Gross debt was reduced by 44% from R28.1-billion to R15.9-billion
- 63% increase in revenue
- Cost sales up 28% (resulted in increased profits, so that’s fine)
-Earnings per share (EPS) up 140% to R 8.43
- R8.5billion paid to SA government (taxes)
10/
Dividends
$SSW has declared an interim dividend of R2.92
- Rewarding shareholders with R8.5billion in dividends
- Dividends will continue to increase - as this is what shareholders want.
(Strong performances like this will allow for it to continue)
11/
Stakeholders
$SSW has rewarded all stakeholders
- R39.7billion cash flow
- R5.6billion in capital Expenditure
- R4.5billion in working capital
- R9.7billion in dividend payments
- R742million share buybacks, and expected to increase this to R9.6billion.
Long $SSW
12/
Capital Allocation
Management continues to allocate capital in the most efficient and prudent way possible, to bring value to all stakeholders.
Their capital framework is below 👇🏽
13/
That’s not all, let’s look at some of their ambitious plans to change the energy sector and how they stand to benefit.
14/
Energy
Under schedule 2 of the electricity regulations act that recently passed, it allows for Sibanye to generate their own energy of up to 100MW
You can expect big investments in this field, with long term benefits. Driving down costs and improving reliance. (Derisking)
15/
Reinvesting back in SA
Fantastic to see them laying out their plans to become carbon neutral
Projects in the pipeline:
- 50mw Gold solar project
- 250mw SA wind energy
- 175mw SA PGM solar projects
Sidenote:
These are jobs they are adding to the economy.
16/
DRD is going to play it’s role
- Producing the greenest gold
- Social investment into education and urban farming
- Hundreds of hectares cleared for social and industrial development
17/
Battery metals
Sibanye is taking strategic bets in companies in Europe too.
Neal Froneman continues to diversify to into strategic regions that offer long term growth.
Read more here 👇🏽
18/
2020 Financials
Check out my previous research on Sibanye-Stillwater.
I remain bullish on the company and plan to hold it long term. The share price has come under stress lately, but the value is there.
Last years financials 👇🏽
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• Recap
- Growing revenue
- Paying dividends
- Buying back shares
- Strong capital allocation
- Reinvesting back into SA
- Rewarding stakeholders
- Diversifying across regions
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