Sibanye Stillwater price testing long term support
Broker ratings continue to suggest a ‘buy’ for Sibanye Stillwater despite tough conditions and a relative underperformance.
Sibanye Stillwater
FY22 was a tough year for Sibanye Stillwater. Industrial action in its South African gold operations combined with extreme flooding in its US platinum group metal (PGM) operations to weigh on headline earnings which roughly halved against the prior year’s comparative figures.
FY23 outlook
The outlook for FY23 has improved. Local mining operations should find little in the way of industrial action with deals realised last year providing some wage clearance up until mid-2027.
Gold prices in 2023 have been materially higher reaching their best all time levels, while the rand has reached all time lows, supportive of export prices.
PGM production in the US, post last year’s flooding, have since normalised since the last quarter of 2022.
Local PGM operations now see the five year payment obligations for the Rustenburg acquisition (from Anglo American Platinum) completed. This means that 100% of the cash flow from the group’s Rustenburg operations will accrue to Sibanye and minority BEE shareholders.
Risks
Loadshedding does however pose a risk to South African operations threatening production levels of platinum group metals in particular. Platinum demand is curtailing palladium demand as the lower priced metal becomes a substitute in gasoline autocatalysts for the automotive market.
Platinum group metals find their primary demand from the automotive segment which has been improving with the easing of supply chain disruptions and availability of semi-conductors. The health of the automotive sector could however start to reflect a weakening economic environment and in turn slow the demand growth of PGMs.
Broker ratings and price targets
A consensus of analyst and broker ratings on Sibanye Stillwater continue to suggest the share to be a ‘buy’ at current levels. A mean of these analyst price targets for the stock suggest a longer-term fair value of R54.46 a share.
These ratings and price targets are derived from Refinitiv data as of the 6th of June 2023.
Sibanye Stillwater – technical analysis view
The share price of Sibanye Stillwater trading back and forth through the 200-day simple moving average suggests that the company trades in a very broad sideways range over the long term.
Support of this range is considered at the 31.60 level, while gap resistance is considered at the 39.20.
Traders looking for long entry might hope to see a bullish reversal off either the 34.05 or 31.60 support level before targeting a short term move towards the 39.20 level.
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