Goldplat plc is a United Kingdom-based company. The Company produces and explores precious metals on the African continent. It operates in two main business areas: the production of precious metals and the mining of and exploration for gold.
This stock has cropped up many times on my value screens. I first noticed it a few months ago and to be honest, I moved swiftly on as I tend to stay away from mining and other resource sectors (even though my background is in oil, gas and renewables). I feel that there are too many moving parts. Companies of this nature tend to be highly capital-intensive with projects often taking many years before completion, by which time, the underlying commodity could have moved significantly in price.
I know very little about Goldplat (LON:GDP) except what is mentioned in Stockopedia and the recent RNS. They seem to be involved in gold mining and gold recover from the waste materials left over from some of the bigger mining companies.
What interests me is, by putting in the numbers into the residual value model, the current valuation of GDP is 179% undervalued.
From Stockopedia, the ROE and ROCE have averaged a healthy 15% over the last 5 years. Although the number of shares outstanding has increased by an average of 13% per year, Book value per share has also increased by 13% meaning, purely from these figures, that the equity raised has been put to good use. These are my initial thoughts anyway although some digging around could prove things are not so rosy!
The latest RNS do indicate actually that things are not too rosy at the moment. The jist of what was said seemed to be along the lines of closing unprofitable operations and improving operations elsewhere. They state that EBITDA for FY2013 will be materially less than forecast.
I don’t know if this has already been baked into the analyst forecasts that are shown on stockopedia for FY 2013/14 but if we more than half the profit for FY 2013/2014, Goldplat is still undervalued by about 24%. I have no idea if I am being conservative or still optimistic by (only) halving FY2013/2014 earnings but I think it does deserve a more in-depth look.
Another…
