Pan African Resources reports 37.3% CAPEX decline in 2020 while 26.1% Revenue growth
15 Sep 2020 • About Pan African Resources (
$PAF) • By InTwits
Pan African Resources reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Pan African Resources has high CAPEX intensity: 5 year average CAPEX/Revenue was 32.0%. At the same time it's a lot of higher than industry average of 15.4%.
- CAPEX is quite volatile: £35m in FY2020, £55m in FY2019, £125m in FY2018, £45m in FY2017, £21m in FY2016
- The company has highly profitable business model: ROIC is 20.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Pan African Resources's Revenue surged on 26.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.0 pp from 1.9% to 8.9% in FY2020.
Gross Margin surged on 12.6 pp from 29.6% to 42.2% in FY2020.
Net Income margin decreased slightly on 1.3 pp from 17.5% to 16.2% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 Pan African Resources had CAPEX/Revenue of 12.6%. The company's CAPEX/Revenue dropped on 15.8 pp from 28.4% in FY2017 to 12.6% in FY2020. It's average level of CAPEX/Revenue for the last three years was 41.1%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2018 at 85.5% and was declining since that time.
Return on investment
The company operates at high and attractive ROIC (20.1%) and ROE (24.1%). ROIC increased slightly on 1.3 pp from 18.7% to 20.1% in FY2020. ROE increased slightly on 1.5 pp from 22.6% to 24.1% in FY2020. During the last 5 years ROE bottomed in FY2018 at -56.1% and was growing since that time.
Leverage (Debt)
Debt level is 0.9x Net Debt / EBITDA and 1.3x Debt / EBITDA. Net Debt / EBITDA dropped on 0.9x from 1.8x to 0.9x in FY2020. Debt dropped on 18.6% while cash surged on 528%. During the last 5 years Net Debt/EBITDA topped in FY2018 at 4.2x and was declining since that time.
Pan African Resources has no short term refinancing risk: cash is higher than short term debt (104.5%).
Valuation and dividends
The company's trades at EV/EBITDA 6.9x and P/E 11.8x.
Management team
Jacobus Albertus Johannes Loots "Cobus" is a the company's CEO. Jacobus Albertus Johannes Loots "Cobus" has spent 6 years with the company. Gp Gideon Louw "Deon" is a the company's CFO. Gp Gideon Louw "Deon" has spent 6 years at the company.
Financial and operational results
FY ended 30 Jun 2020
Pan African Resources ($PAF) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 251.3 | 158.7 | 146.2 | 217.4 | 274.1 | 26.1% |
| Gross Profit | 89.3 | 61.7 | 38.8 | 64.4 | 115.6 | 79.6% |
| SG&A | | 0.2 | 0.2 | | | |
| EBITDA | 67.1 | 71.7 | 28.4 | 74.7 | 86.9 | 16.2% |
| Net Income | 37.8 | 22.7 | -125.6 | 38.0 | 44.3 | 16.4% |
Balance Sheet
|
|---|
| Cash | 3.5 | 12.3 | 0.9 | 5.3 | 33.5 | 527.8% |
| Short Term Debt | 9.3 | 5.4 | 6.8 | 26.5 | 32.1 | 20.9% |
| Long Term Debt | 0.0 | 16.0 | 114.1 | 111.3 | 80.1 | -28.0% |
Cash flow
|
|---|
| Capex | 20.9 | 45.1 | 124.9 | 55.1 | 34.6 | -37.3% |
Ratios
|
|---|
| Revenue growth | 13.0% | -36.8% | -7.9% | 48.7% | 26.1% | |
| EBITDA growth | 50.1% | 6.9% | -60.4% | 163.1% | 16.2% | |
|
|---|
| Gross Margin | 35.5% | 38.9% | 26.5% | 29.6% | 42.2% | 12.6% |
| EBITDA Margin | 26.7% | 45.2% | 19.4% | 34.4% | 31.7% | -2.7% |
| SG&A, % of revenue | | 0.1% | 0.2% | | | |
| Net Income Margin | 15.1% | 14.3% | -86.0% | 17.5% | 16.2% | -1.3% |
| CAPEX, % of revenue | 8.3% | 28.4% | 85.5% | 25.4% | 12.6% | -12.7% |
|
|---|
| ROIC | 17.9% | 20.3% | 4.7% | 18.7% | 20.1% | 1.3% |
| ROE | 17.1% | 9.7% | -56.1% | 22.6% | 24.1% | 1.5% |
| Net Debt/EBITDA | 0.1x | 0.1x | 4.2x | 1.8x | 0.9x | -0.9x |
Peers in Mining
Below we provide Pan African Resources benchmarking against other companies in Mining industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sylvania Platinum Ltd ($SLP) | - | 27.8% | 24.3% | 12.4% | 61.7% |
| Glencore ($GLEN) | 3.8% | 34.3% | 6.9% | -2.1% | - |
| Firestone Diamonds ($FDI) | - | - | - | -8.0% | - |
| |
|---|
| Median (3 companies) | 5.5% | 18.0% | 6.9% | -2.1% | 61.7% |
|---|
| Pan African Resources ($PAF) | - | -36.8% | -7.9% | 48.7% | 26.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Polyus Gold Intl Ltd ($PGIL) | 62.6% | - | - | 64.1% | - |
| Sylvania Platinum Ltd ($SLP) | 19.6% | 28.2% | 27.9% | 36.4% | 57.9% |
| Firestone Diamonds ($FDI) | - | - | 8.2% | 18.0% | - |
| Glencore ($GLEN) | 2.1% | 3.8% | 4.1% | 2.2% | - |
| |
|---|
| Median (4 companies) | 28.6% | 24.8% | 8.2% | 27.2% | 57.9% |
|---|
| Pan African Resources ($PAF) | 35.5% | 38.9% | 26.5% | 29.6% | 42.2% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Polyus Gold Intl Ltd ($PGIL) | 61.4% | - | - | 66.7% | - |
| Sylvania Platinum Ltd ($SLP) | 27.3% | 36.3% | 35.4% | 42.9% | 51.0% |
| Glencore ($GLEN) | 5.0% | 5.8% | 6.4% | 4.9% | - |
| Firestone Diamonds ($FDI) | - | - | 9.4% | -54.0% | - |
| |
|---|
| Median (4 companies) | 24.6% | 28.5% | 9.4% | 23.9% | 51.0% |
|---|
| Pan African Resources ($PAF) | 26.7% | 45.2% | 19.4% | 34.4% | 31.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Polyus Gold Intl Ltd ($PGIL) | 16.5% | - | - | 19.2% | - |
| Sylvania Platinum Ltd ($SLP) | 3.7% | 8.3% | 12.6% | 11.8% | 4.7% |
| Firestone Diamonds ($FDI) | - | - | 3.2% | 6.9% | - |
| Glencore ($GLEN) | 2.0% | 1.7% | 2.1% | 2.2% | - |
| |
|---|
| Median (4 companies) | 15.3% | 12.4% | 5.2% | 9.3% | 4.7% |
|---|
| Pan African Resources ($PAF) | 8.3% | 28.4% | 85.5% | 25.4% | 12.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sylvania Platinum Ltd ($SLP) | 5.0% | 11.2% | 12.5% | 17.7% | 35.9% |
| Glencore ($GLEN) | 2.4% | 7.6% | 8.7% | 3.9% | - |
| Red Rock Resources ($RRR) | 7.9% | -2.8% | -12.6% | -23.0% | - |
| Firestone Diamonds ($FDI) | -4.4% | -87.2% | -6.0% | -42.4% | - |
| Regency Mines ($RGM) | -40.5% | -9.5% | -49.8% | -50.0% | - |
| |
|---|
| Median (6 companies) | 5.0% | 7.0% | -6.0% | -23.0% | 35.9% |
|---|
| Pan African Resources ($PAF) | 17.9% | 20.3% | 4.7% | 18.7% | 20.1% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Glencore ($GLEN) | 4.0x | 2.7x | 2.4x | 3.4x | - |
| Polyus Gold Intl Ltd ($PGIL) | 2.1x | 64.5x | - | 1.2x | - |
| Sylvania Platinum Ltd ($SLP) | -0.5x | -0.8x | -0.6x | -0.7x | -0.9x |
| |
|---|
| Median (3 companies) | 1.4x | 0.6x | 1.1x | 1.2x | -0.9x |
|---|
| Pan African Resources ($PAF) | 0.1x | 0.1x | 4.2x | 1.8x | 0.9x |
