"Johnson Matthey doesn’t expect any sales from Russian state stockpiles this year:"
Maybe none from Russia strategic stockpile but Norilsk (Private company) still going strong producing Pd.
"30 to 35 % Easy increase in earnings"
You mean REVENUE not EARNINGS. They have no earnings.
And even if 60M happens (unlikely) that is an increase of 11M in revenue over Q1. Since they lost 29M Q1 even if that revenue were 100% profit (which it isn't) they still will have lost 18M.
Straw,straw,straw,straw - grasp at your opwn rsik.
No and the stock price shows that. In the past 12 months. PAL is so far under water that Pd price matters little.
Maybe in 3 years (if the survive) and can rollover BAM at lower rate then maybe a small profit. But too many shares and stockholders will benifit very little.
What's in your portfolio?
"The loan hole PAL dug itself, makes them a pretty risky bet."
That's the key. If they can survive until 2017 and maybe roll the loan over at a much lower interest rate then they can make a little money. But the big question is can they limp along to 2017?
I don't see them as an acquisition target unless they can show all-in sustaining costs less than PD price. Haven't done the calc but let's assume they rollover BAM at 8% - will AISC be under PD?
FYI: Look at SWC debt - under 2% interest rate!!!!!!!
Back when PD was 775 I made a "bet" with bigsee4c that 3PM London close would hit 725 (-50) before it hit 825 (+50). On May 21st 3PM LC was 828.
Yes, I am long 5K.
Just a caution to those who think the sky's the limit for Pd (most of them are on the PAl board) there are three factors causing the Pd rally - in order of importance IMO
- new SA ETF - have absorbed close to 600Koz
- SA strike - will end eventually and ironically the PD runup may avert permanent shutdowns
- Russia - No real hard effect of Pd exports but it is a factor because it is a possibility. And Putin seems to be blinking a little as sanctions have been hurting Russian stock market, economy and banks. Maybe this hits him where it hurts - do you think he cares about Pd.?
So be careful - the above are transient , not a sea change.
No question that SWC is an "accumulate". Just warning that nothing (PD) goes up forever and the factors that I mentioned are temporary, not underlying. A dip in PD prices may present an opportunity to accumulate SWC. As to the long term supply/demand that is a different discussion and I am not as bullish are most others.
In April, Russia exported about 10 times the normal monthly shipment as a way to avoid any possible upcoming sanctions. Now will they do the same thing in May?
Whenever a stock goes down holder complain and blame:
- the shorts
- the MMs
- the manipulators
They blame everyone except themselves for buying the wrong stock at the wrong time and holding too long.
"PAL is a screaming buy at this very low Historical Price!"
Same thing could have been said at 4,3,2,1, .90 ,.80 ,50, .30
Stock near multi-year lows (despite PD) for a reason.
" With SWC's entire Pd.Prod. tied up for 5 yrs to Johnson Matthey .."
Tied up? It still contributes to supply - JM just doesn't have to buy elsewhere for their cc business.
Also makes it less risky for SWC to expand production.
"Pd prices high & rising."
Rise has been 99% due to new SA ETF which have absorbed almost 700Koz.
How about looking at what is happening at PAL and you will see nothing different to cause price rise.
Upcoming $60LOC expiration. Can they rollover and at what rate?
Still $259M of 15-19% debt.
No published sign of TPD rampup - still stuck under 3100TPD.
All in sustaining cost still above PD price,
Close to 400M shares outstanding which will divide any meager earnings to such a tiny EPS that PPS will be just as low.
Seems more like a screaming sell than a screaming buy.
" Buying EMTEQ & Fischer and selling the energy assets would be approx a net wash.
$ 500 million out and $ 500 million received"
But they haven't sold so it just raises the cost to a buyer by that $500M. Does a buyer want the added task/nuisance of integrating 2 new companies?
In general I think BEAV is a hard sell due to it's valuation - high for it's industry and PE not cheap. Buyer like acquistions to be accretive and high PE makes that difficult.
I think their buying stuff is a realization that they are in a industry where it is difficult to increase organic growth. Not like HD where you can open new stores - you are dependent upon airline industry health. So alternative is M&A growth. Right now BEAV looks a bit bi-polar to me.
"Russia predicted not to produce this year"
What makes you think that?
Russian firm NORILSK is producing as normal and a little more than normal. Russian exports to Switzerland in April were 10x the normal monthly activity.
It is done when there are people who wish to short and no shares are available to borrow from the usual sources (other accounts, professional lending funds, etc)
FYI: That is 10% annualized, not 10%. And yes, you can recall and sell your shares anytime. I believe Schwab puts up treasuries as collateral.
I think their oil plan is to bring their expertise in delivering critical parts and supplies on-time to the oil service business. I thought they might (and may still) gather up a geographically spread out bunch small companies and make one company with meaningful market share. IMO not a bad plan.
The distraction I referred to was integrating the two new aircraft parts companies.
Not a distraction for BEAV as part of a long term plan but may be to a potential buyer (And the added $500M).
So are they trying to grow BEAV organically and with M&A or looking to sell it off whole or piecemeal? I get mixed messages.
At the cc all was rosy, good book to bill, record qtr , backlog etc everybody smiling etc. Then 15 days later they are are worried about shareholder value? As a shareholder since $3 I was very happy and no complaints. Div or buyback a much simpler route to increasing shareholder return than hiring an strategic advisor. There had to be a surprise something on the table
"You seem to think so."
I don't necessarily think so, but maybe BEAV thinks so. The real problem is creating growth when you are not in control. Airlines expand - you grow - else you stagnate. I think they mentioned in the cc that there were 2 acquisitions in the works.
Market was initially disapppointed in the announcement but shook it off at the end. I still believe was more than activist group purchase. That IMO not a reason to call off an investor day and hire "an advisor".