Analyst recommendation

As at 1 May 2025

Executive Summary

In this report, we look at the interim results for the period ended 31 December 2024 of Impala Platinum, released in February and the current global macroeconomic environment.

Financials:
• Revenue declined by 2.6% to R42.3 billion, affected by lower realised 6E dollar price and a stronger rand to dollar conversion. This was offset by higher sales volumes and an increase in revenue from Nickel sales during the period.
• The cost of sales increased by less than 1% during the period, showing the effect of restructuring initiatives during FY24.
• EBITDA declined by 23% to R6.5 billion.
• Headline earnings per share declined by 43.6% to 206 cents compared to 365 cents for 1H24.
• The realised price per 6E ounce declined by 7.6% to R23 831.
• Group unit cost worsened by 2.7% with the cost of production per 6E ounce increasing to R20 885.

Production:
• 6E refined production improved by 2.1% to 1 787 700 oz.
• 6E sales volumes increased by 4.5%.
• Tonnes milled declined by 4%, while 6E grade per tonne improved by 1%.
Full Year guidance:
• In the interim results, the FY25 guidance for volumes and costs remains unchanged while capital expenditure has been lowered from between R8 - R9 billion to R7 - R8 billion.

The current global uncertainty, stemming from the implementation of tariffs, will have a material effect on industries like the automotive sector. With price increases unlikely to be absorbed by companies, and thus fully transferred to consumers, demand will decline. This will have a material effect on raw product prices used in these industries, like PGM. We therefore believe the industry outlook is no longer cautiously optimistic in the short to medium term, but rather cautiously pessimistic.

Analyst thesis

• Among the top PGM producers, Implats stands out with the highest group exposure to these metals. The acquisition of RBPlats has strengthened its asset portfolio, extended the mine's lifespan, and reduced unit costs.

• Despite the challenging commodity price environment, Implats maintains a robust balance sheet, holding over R6 billion in net cash, ensuring its resilience with low levels of debt, allowing the company to remain afloat on lower, prolonged PGM prices. Prolonged lower PGM prices will be a test of cost management for management.

Valuation

Table 3: Valuation

We have valued PPC Limited using a discounted cash flow (DCF) model. In our valuation we have flexed our bear, base, and bull scenarios, each assigned with an equal probability weighting.

Source: FactSet