🕐07.02.14 - 10:27 Uhr

INVESTEC: AQUARIUS PLATINUM : STILL IN THE RED - SELL




Aquarius Platinum (Price: 39.0p | Target: 36.0p | Rec: Sell) Aquarius Platinum’s H1 results undoubtedly represent operational improvement.

However, the company’s efforts have been watered down by the various factors which are working against it, not least the platinum pricing environment.

The company must repay its c.US$300m convertible in December 2015 and we do not believe it will generate enough cash to do this on its own.

We reiterate our view that the company would benefit from an improved macro environment before it looks to refinance this debt. * Aquarius’s H1 FY14E results.

Aquarius has reported H1 revenue of US$113m vs our estimate of US$121m.

We estimated a net loss per share of 1c, and the group has reported a loss of 5c.

There is an impairment in the accounts, but this is only US$2.5m or c.0.5c of the net loss per share.

The group ended the period with cash of US$83m. * Our view: Given that Aquarius reported an interim loss of 39c/share (adjusted, to -12c/share) during the same period last year, operational progress clearly is being made.

But our concerns remain as to whether the operational improvements alone are sufficient to warrant the refinancing of the c.US$300m convertible which falls due at the end of next year, while the platinum pricing environment remains weak.

In addition, we are concerned that the fate of Mimosa lies largely in the hands of the Zimbabweans and Kroondal has a relatively short mine life (c.9 years).

The recent announcement on the sale of the non-core assets was certainly encouraging, and there are other non-core assets which still lie within the company.

However, we would be surprised if selling these other properties would negate the need for a refinancing. * Valuation and recommendation: We place our forecasts and valuation under review while we update our model to reflect these results.

However, we expect to retain our Sell recommendation.
To access the full note please click here Analyst: Louise Collinge +44 (0)20 7597 5779
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