PLS sir, may we have some more...
1H23 RESULT
Need To Know
- In-line result, production guidance upgraded (in-line with market).
- Maiden dividend of 11cps announced, fully franked.
- Re-iterate our Hold rating.
Result Highlights
Revenue: A$2.18bn, in-line with market.
EBITDA A$1.81bn, 5% beat on market.
NPAT: 1.24bn, 3% miss on market.
EPS: 41cps, 5% below market expectations.
DPS 11 cps, fully franked. The First dividend for PLS.
Guidance Upgrade
The spodumene production range was upgraded to 600-620ktpa at A$580-610/dmt. This upgrade is broadly in line with the market.
CAPEX has also been adjusted, increasing to A$445-465m. We note that the P680 spend is lower (due to the timing of spend and scheduling) but sustaining capex has more than doubled. Indicating a large increase in the second half of FY23.
Investment View
Overall, an in-line result.
The presentation indicated that lithium hydroxide pricing in January was equivalent to PLS’s last auction, at ~US$7,500/t for 5.5% Li20 product. Since then, Lithium hydroxide has fallen potentially greater than 15% suggesting that PLS may see some elevated negative provisional pricing adjustments for 3Q FY23.
The introduction of a dividend is to be well received. The dividend is a 20% payout ratio (30% when including tax payable) of the 1H FY23 free cash flow (FCF). This is consistent with the target 20-30% FCF range that the management team provided in December.
Whilst the result demonstrates some decent 1H operations, we are in the view that headline prices for spodumene will continue to fall, and the growth profile may become increasingly difficult to meet for PLS.
We re-iterate our hold rating for PLS.
Stock Overview
Share Price
Company Overview
PLS is an Australia-based pure-play lithium company. The company is primarily engaged in the exploration, development and mining of minerals in Western Australia
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