Unconvinced the market has appreciated their company’s valuation, management of Tharisa (THS) has previously spoken about the need to more forcefully communicate the platinum and chrome miner’s virtues. The introduction of a maiden half-year dividend – rounded up to 2¢ and above a policy to pay out at least 15 per cent of post-tax profits – is certainly one way to sway the doubters. The response was a 4 per cent share price rise on the publication of these numbers.
Then again, some goodwill may have recently been extinguished. Twelve days before the publication of half-year numbers, and two hours before the market closed for the bank holiday weekend, Tharisa issued a trading statement foreshadowing a material drop in earnings for the period.
The reasons for the decline were perfectly understandable: unfavourable currency movements and a “normalisation” of chrome concentrate prices to $193 per tonne, 30 per cent off the volatile spike seen at the start of FY2017. But investors are quickly spooked when companies appear to rush out bad news, and Tharisa's shares predictably dropped 18 per cent before the close. Finance director Michael Jones admitted to us that “lessons had been learned” from the episode.
Regardless, many miners would kill for a gross profit margin of 28 per cent. What’s more, net profits of $28m (£20.8m) would have been even stronger had the group not acquired its fleet and move to an owner-mining model.
For the 12 months to September 2018, Peel Hunt forecasts adjusted pre-tax profit of $78m and EPS of 20.4¢, rising to $106m and 24.8¢ in 2019.
| THARISA (THS) | ||||
| ORD PRICE: | 105p | MARKET VALUE: | £274m | |
| TOUCH: | 102-108p | 12-MONTH HIGH: | 143p | LOW: 73p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 129¢ | NET DEBT: | 7% | |
| Half-year to 31 Mar | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 175 | 68.3 | 16.0 | nil |
| 2018 † | 199 | 37.2 | 10.0 | 2.0 |
| % change | +14 | -46 | -38 | - |
| Ex-div: | 07 Jun | |||
| Payment: | 20 Jun | |||
| £1=$1.35 † 2018 dividend to be paid to UK shareholders at a rate of 1.4782p per share | ||||
