SA PLATINUM:4Q17 SA PLATINUM:MODEST DEFICITS EMERGING

时间:2017年10月13日 17:01:13 中财网
Near-term prices marked higher but full recovery still some way out
We have increased our price targets for the producers by an average of 10%after upgrading our Rand-basket price forecasts for 2017 and 2018 by 4% and6%, respectively. The upgrades follow strong price performances from palladium(+31% ytd) and rhodium (+61% ytd), which led us to upgrade both metals'
price forecasts by 18% in 2018 to US$930/oz and US$1,000/oz, respectively. Theplatinum price has lagged in 2017, down 3% year-to-date to US$914/oz, but weexpect a price recovery in 2018 to US$1,088/oz. We upgrade Impala to a Buy(R35ps PT), on a 9% increase to our price target (the stock is down 27% yearto-date)。 We have unchanged recommendations on Amplats (Buy, R375ps PT),Northam (Hold, R44ps PT), Lonmin (Sell, R9.50ps/GBp54ps PT) and RBPlat (Hold,R31ps PT)。 We are neutral overall on the sector as under DB forecast prices (whichramp-up in 2020/2021 on higher deficits), the sector looks relatively fairly valuedat 0.9-1.1x P:NPV (excl. Lonmin at 1.5x)。 The producers, except Amplats, areFCF-negative over the medium term under DBe and spot prices. If spot persists,negative free cash flow continues and all the producers have negative NPVs,except for Amplats at a 2.4x spot P:NPV. We maintain our view that the Randpriceis likely to remain at or around the marginal cost of production until 2020owing to our forecast for a relatively balanced market.
Commodity forecasts: modest 2018 industrial deficit in Pt after 2yrs of surplus
In addition to small deficits, the Rand-Basket price remains below marginal cost,which theoretically provides price support and historically has appeared to do so.Supply cuts have started to occur in response to low prices. Atlatsa/Bokoni andMaseve mines are ceasing production, while Impala and Lonmin are once againreviewing their strategies in response to prices.
Company specific changes: 17E&18E earnings upgrades = smaller losses
We have increased our earnings forecasts for the next two financial years onthe back of higher forecast prices; however, the only profitable (EPS) platinumproducer under our forecasts across both years is Amplats. Margins remain lowand forecasts are highly sensitive to input assumptions as a result.
DCF-based valuations, 1x NPV, Sector risks include commodity, FX forecasts
Changes to price targets, forecasts and recommendations are summarised in. Company-specific risks and detailed changes to estimates are availableper company within the report.
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