Latest news with #JubileeMetals
Yahoo
16-06-2025
- Business
- Yahoo
Is There An Opportunity With Jubilee Metals Group PLC's (LON:JLP) 44% Undervaluation?
The projected fair value for Jubilee Metals Group is UK£0.065 based on 2 Stage Free Cash Flow to Equity Jubilee Metals Group's UK£0.037 share price signals that it might be 44% undervalued Our fair value estimate is 22% lower than Jubilee Metals Group's analyst price target of US$0.084 Today we will run through one way of estimating the intrinsic value of Jubilee Metals Group PLC (LON:JLP) by taking the expected future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) -US$19.2m US$21.7m US$20.0m US$19.2m US$18.7m US$18.5m US$18.6m US$18.7m US$19.0m US$19.3m Growth Rate Estimate Source Analyst x2 Analyst x2 Analyst x1 Est @ -4.41% Est @ -2.33% Est @ -0.87% Est @ 0.16% Est @ 0.87% Est @ 1.37% Est @ 1.72% Present Value ($, Millions) Discounted @ 7.8% -US$17.8 US$18.7 US$16.0 US$14.2 US$12.8 US$11.8 US$11.0 US$10.3 US$9.7 US$9.1 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$96m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.5%. We discount the terminal cash flows to today's value at a cost of equity of 7.8%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$19m× (1 + 2.5%) ÷ (7.8%– 2.5%) = US$376m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$376m÷ ( 1 + 7.8%)10= US$177m The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$273m. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of UK£0.04, the company appears quite undervalued at a 44% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Jubilee Metals Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.8%, which is based on a levered beta of 1.028. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Jubilee Metals Group Strength Debt is well covered by cash flow. Weakness Earnings declined over the past year. Interest payments on debt are not well covered. Opportunity Annual earnings are forecast to grow faster than the British market. Good value based on P/E ratio and estimated fair value. Threat Revenue is forecast to grow slower than 20% per year. Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For Jubilee Metals Group, we've put together three further factors you should consider: Risks: To that end, you should be aware of the 2 warning signs we've spotted with Jubilee Metals Group . Future Earnings: How does JLP's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every British stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
IOL News
05-06-2025
- Business
- IOL News
Jubilee Metals receives R1. 6 billion offer for its South African chrome and PGM operations
Jubilee Metals, a diversified metals producer with operations in South Africa and Zambia, has received a conditional binding offer from a private mining and metals trading company to acquire the group's chrome and platinum group metals operations in South Africa Image: Supplied Jubilee Metals, a diversified metals producer with operations in South Africa and Zambia, has received a conditional binding offer from a private mining and metals trading company to acquire the group's chrome and platinum group metals (PGM) operations in South Africa for a consideration of up to $90 million (R1.6 billion). The shares leapt 4.17% to R1.00 on Thursday morning on the JSE as investors welcomed the news. The offer allows Jubilee to sharpen its focus on expanding its copper strategy in Zambia while retaining exposure to the PGM market through its Tjate Platinum mining project. Under the terms of the offer, Jubilee will retain all current rights to the Tjate Platinum mining project offering Jubilee continued exposure to the potential upside of the PGM market, while focusing to further advance the Company's copper strategy in Zambia. The total consideration of up to $90m is payable through a combination of cash upfront and deferred cash payments over an approximate three year period. Jubilee's board has reviewed the offer and recognises its compelling value proposition. The company is also evaluating its dividend policy to potentially enable future distributions to shareholders. A detailed shareholder circular outlining the transaction will be issued soon. Absa Corporate and Investment Bank, a division of Absa Bank Limited, has been appointed as the financial advisor for the transaction. Strategic Focus on Copper in Zambia The disposal of the chrome and PGM operations allows Jubilee to prioritise its Zambian operations, where the company sees significant growth potential. Strong copper markets support higher earnings potential resulting in higher margins than that of chrome. It said, "With the anticipated continuing expansion of the world's growth in electrification generally, renewable power and automotive applications, demand for copper is expected to remain high. Jubilee has demonstrated its ability to successfully recover copper from shallow, transitional reefs. Recent trials confirm the Roan concentrator's capability to maintain a ROM feedstock run rate of between 35 000 to 40 000 tonnes per month (tpm) on the transitional reefs equating to 240 (at 35 000 tpm throughput and min Cu grade) to 360tpm of Cu units (at 40 000tpm and targeted Cu grade," Jubilee said. Jubilee recently continued to expand its near surface mining portfolio with the execution of two further agreements offering the exclusive right to perform its due diligence on these properties with the option to purchase the rights pending the outcome of the due diligence. Zambia holds additional potential opportunities which Jubilee seeks to secure. Jubilee's in country operational presence and processing know-how, positions Jubilee well to pursue these opportunities.
Yahoo
25-05-2025
- Business
- Yahoo
Jubilee Metals Group (LON:JLP) Could Be Struggling To Allocate Capital
Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. In light of that, when we looked at Jubilee Metals Group (LON:JLP) and its ROCE trend, we weren't exactly thrilled. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Jubilee Metals Group: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.047 = US$12m ÷ (US$427m - US$162m) (Based on the trailing twelve months to December 2024). Therefore, Jubilee Metals Group has an ROCE of 4.7%. In absolute terms, that's a low return and it also under-performs the Metals and Mining industry average of 7.0%. See our latest analysis for Jubilee Metals Group Above you can see how the current ROCE for Jubilee Metals Group compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Jubilee Metals Group for free. In terms of Jubilee Metals Group's historical ROCE movements, the trend isn't fantastic. Around five years ago the returns on capital were 8.8%, but since then they've fallen to 4.7%. Although, given both revenue and the amount of assets employed in the business have increased, it could suggest the company is investing in growth, and the extra capital has led to a short-term reduction in ROCE. And if the increased capital generates additional returns, the business, and thus shareholders, will benefit in the long run. On a side note, Jubilee Metals Group's current liabilities have increased over the last five years to 38% of total assets, effectively distorting the ROCE to some degree. If current liabilities hadn't increased as much as they did, the ROCE could actually be even lower. While the ratio isn't currently too high, it's worth keeping an eye on this because if it gets particularly high, the business could then face some new elements of risk. Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for Jubilee Metals Group. These trends are starting to be recognized by investors since the stock has delivered a 32% gain to shareholders who've held over the last five years. So this stock may still be an appealing investment opportunity, if other fundamentals prove to be sound. If you want to continue researching Jubilee Metals Group, you might be interested to know about the 1 warning sign that our analysis has discovered. While Jubilee Metals Group isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
