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Sylvania Platinum - Excellent Q4 production but lower PGM basket

Sylvania Platinum is a safe, low-cost surface platinum group metals (PGM) dump re-treatment company operating in South Africa (SA). Its low-cost operations met production challenges in the first three quarters of FY22, but in Q4 recorded near-record production. However, PGM basket price pressures due to global recessionary concerns, and a modest tick-up in cost inflation, have resulted in a 12.5% reduction in our FY22 EPS forecast. Sylvania is still operating at a healthy margin of 41% on our FY22 estimates (FY21: 53%). Its concerted share buyback programme reduced the share count by 6.8m (2.5%) and has been value accretive to our FY23 forecasts and valuation. We expect a recovery in PGM prices in FY23 due to pent-up vehicle demand and improving supply chains and have left our forecast basket price unchanged. Our FY23e EPS is unchanged, with offsetting buy back and inflation impacts. We have lifted our valuation to 169p thanks to the buybacks. FY22 results are due on 8 September.