Griffin Mining down 12% this morning?

7th Aug '18 by mmarkkj777

15 comments 3692 reads

Griffin Mining (LON:GFM) are down 12% so far this morning. I can't see any news. Anybody know why? or is it just normal volatility (seems high for that).

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Mmarkkj777

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I have been investing for a long time, but have become more serious about my investments over the last 3 years and am looking to use Stockopedia tools and info. to help maximise my gains. I have a Portfolio of 14 Buy and hold companies: 3 US, 1 European and 10 UK. I have held one for 20 years and one for 14 years. In the last few months I have added a growth portfolio (at least I hope they will grow!) . It is now up to 6 stocks.More recently Oct 2018, I have reverted to cash for a substantial part of my portfolio (over 2/3rds). I'm now looking for bargains and opportunities to reinvest. more »

15 comments

gus 1065

7th Aug '18

Half year results out.

https://www.investegate.co.uk/griffin-mining-ld--gfm-/rns/half-year-report/201808070700039708W/

Not too bad at face value but draws attention to the sharp fall in Zinc price this year (their main product) and somewhat gloomy outlook. Also staying mum on possible increase in dividends and hints that they’re looking elsewhere in China for somewhere to spend shareholder cash. Investors possibly wary of a board looking to build an empire at investors’ expense.

Gus.

ls2g08

7th Aug '18

They released their interim statement today.

"The second half of the year will remain challenging if commodity prices remain subdued."

Language like this will have caused the fall I think.

mmarkkj777

7th Aug '18

I've just been reading them. Thanks.

Don't seem too bad. I think the share price should normalise. Might be an opportunity to top up.

andrea34

7th Aug '18

I wish I understood investment strategies. I don't know why one would by additional shares in a company that has just announced interim results which show no growth at all, have expressed the outlook as challenging (in this case based on continued pressure on falling metal prices), and continue to deny investors even the tiniest of dividends. Perhaps it is all based on the hopes of the Zone II license being fully granted? If that is the case, the sentiment is all about hope and nothing about the facts of the current flat performance :-/

mmarkkj777

7th Aug '18

Hi Andrea341,

Just to give a bit of an explanation for the rationale for my comment. I made it because sometimes these sell offs are overdone. People all want to sell at the same time (on perceived bad news) and the demand is not there to satisfy supply, so the share price falls to compensate. It could be the start of a decline, or it could just be a dip in its growth curve. Time will tell. I like to buy on a dip if I can.

Personally, I'm not really interested in a small div on a growth stock. I'd rather them reinvest the funds in the business to achieve more growth (I am interested in divs. in blue chips that have already been through their major growth stage and I'm just looking for steady performance and growth and a div that off-sets inflation).

Just a view, and we need different ones to make markets work.

AnonymousUser252054

7th Aug '18

I find London stock exchange alerts useful for following newsflow.

andrea34

7th Aug '18

Oh I'm not saying that your strategy is incorrect just like mine is not right - I don't do that well trading in shares on average, though I'm hoping subscribing to Stockopedia and having access to wealth of information that it offers will improve things. It is more than I don't feel I have a good understanding of different investment strategies... and perhaps I don't need to.

I don't tend to buy stocks when there has been bad news, because I'm afraid of their being more bad news, aka "profit warnings occurring like London buses". When (if?) Griffin Mining (LON:GFM) fully secure the Zone II license then the share price will surely recover lost ground. I also prefer to buy after a bit of a dip, for example I topped up on Bilby (LON:BILB) not too long ago and they have done well since.

Albertos

7th Aug '18

As far as I can see Griffin's results are pretty bad.

They did not give comparative production figures for the half year but for zinc they have fallen from 19,553 MT to 16,873 MT - quite a drop. Whilst the cost of sales figure has gone up considerably.

Looking at the price graph for the zinc I would have said the price of zinc is up on average at least 15%-20% in the first half of 2018 compared to the first half of 2017.

Consensus EPS is currently 24c - that for the half year is stated at 9c - since the zinc price has slid in the recent month or so by @20% - there's no way they'll get anywhere near 24c.

As far as I can see this is quite a bad profit warning.

Anyone disagree?

Phil

Rusty2

7th Aug '18

Well I would sell on bad news, you can always buy back in later if things improve.

Yes top up on dips but not on bad news.

mmarkkj777

7th Aug '18

The consensus has always been to sell on bad news and often its correct.

Most big dips have a reason, sometimes its bad news.

The crux is, will the share price be severely affected, or is it temporary. I'll stick my neck out and say I think its temporary, as I think with zero debt, and a lowish PE, high margin and high return on capital, it looks good to me for the medium-long term and will recover. I might be wrong, and I'm sure there are many who will say I am (probably on this post), but I think there is still value in this share and I'm looking to possibly top up sometime soon.

Albertos

7th Aug '18

You could be right, however, I don't think the "lowish PE" will stay once revised broker forecasts appear.

Good luck

Phil

chandm123

7th Aug '18

It'll be interesting to see whether the SP ranking changes from 100 tonight as a result of the drop.

mmarkkj777

7th Aug '18

Strangely, it was 97 yesterday. But, like you, I don't think today's drop has been factored in yet.

Yes Phil/Edward, it will be interesting to see what revised future earnings will look like.

I'm still biding my time before I add. The price is still in that 122-125 range at the moment.

Snoo

7th Aug '18

If it was a bad profit warning I think the markets would have reacted in a bigger way.

I think there are quite a few things to be disappointed with here. Lack of clarity over the licence seems to be the main one for me. It seemed much more of a done thing on the previous RNS.

With world politics being a bit tetchy at the moment the unexpected could happen, and it appears from the latest figures that a lot of cash is being spent developing Zone II which could be a sunk cost in the worst case. The cash balance only increased c.$1m, so there are some significant spends.

In isolation, this is a good company - it's generating profit, has cash and no debt and from what I have read has a relatively solid future in the mines it has licences over.

But trust in the board seems to have gone down a few notches today, with the lack of detailed reassurance. It seems to me that should a big cash balance be built up, they might attempt further acquisitions which may not deliver value to shareholders.

Albertos

7th Aug '18

Good points, many of which I agree with.

Still think its a bad profit warning - I think the market just has'nt figured it out yet. Guess it's more difficult than normal when the company has terminated the broker that made the forecast.

We'll see.

Phil

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Griffin Mining down 12% this morning?

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Mmarkkj777

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