- Uranium holding company records pre-tax profit of $22m in FY21 first half
- Net asset value to share price discount narrowed from 13 per cent a year ago to 9 per cent on 9 December
Uranium holding vehicle Yellow Cake (YCA) has kept on track in the face of the pandemic, even completing a buyback programme announced in January last month.
As a company that exists to buy and sell the nuclear feedstock, its strategic decisions are limited. On top of dealing in U3O8, or yellowcake, it can split the difference between its valuation and the uranium spot price.
That process works because it can sell uranium at the spot price and buy back shares at the discounted price, currently around 9 per cent. Yellow Cake has just finished an $9.9m (£8.6m) buyback programme, running between July and November, taking the year's total paid out to $11.4m.
The company recorded a pre-tax profit of $22m for the six months to 30 September, which is the change in value of its uranium minus corporate expenses. Its 2020 financial year profit was $12.5m.
Naturally bullish on the material’s prospects, Yellow Cake says medium and long-term demand outweighs short-term decline as ageing plants in the US are shut off. We think the company is still worth looking at for these reasons too. Buy.
| YELLOW CAKE (YCA) | ||||
| ORD PRICE: | 217p | MARKET VALUE: | £ 182m | |
| TOUCH: | 216.5-217.5p | 12-MONTH HIGH: | 235p | LOW: 136p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 8 | |
| NET ASSET VALUE: | 332p | NET CASH: | $3.3m | |
| Half-year to 30 Sept | NAV ($m) | Pre-tax profit ($m)* | Earnings per share (¢) | Dividend per share (p) |
| 2019 | 252 | -3.1 | 4.0 | nil |
| 2020 | 280 | 21.7 | 25 | nil |
| % change | +11 | - | +525 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.33 *See profit explanation in copy | ||||
Last IC view: Buy, 208p, 19 Jun 2019
