Vehicles need autocatalysts like rhodium/palladium/platinum. China is increasingly using more of these PGM’s in their vehicles.
Vehicles need autocatalysts like rhodium/palladium/platinum. China is increasingly using more of these PGM’s in their vehicles.
Iron ore is correlated to China construction.
Platinum, palladium and rhodium have all been moving higher and I expect them to go higher as China is loading more palladium and rhodium in their vehicles. China vehicle sales have rebounded as well.
Platinum is going to be used in 3-way catalysts, which will boost platinum prices. Sibanye-Stillwater expects platinum to reach $2000 per ounce in 2025.
SBSW’s EBITDA was $922 million in Q3 2020. This translates to $3.7 billion EBITDA per year. With a 5 multiple, SBSW should be valued at $18 billion market cap. So there is 50% upside. The company has no net debt.
Net earnings were $1 billion per year in 2020, but is expected to rise 66% on higher rhodium/platinum prices and higher production numbers. Earnings per share are expected to be at $3.52 per share, which gives Sibanye-Stillwater a P/E of 4.8 which is very cheap.
On top of this, SBSW is expected to offer a dividend yield of 8% and is also moving into the battery metal space.
But price to earnings ratio is ok at 5-7.
China’s iron ore production is not growing.
China is the largest iron ore consumer and iron ore imports are growing.
Iron ore is currently in deficit.
Therefore Vale is a good investment.
According to Sibanye, platinum will reach $2000/ounce in 5 years.