Sibanye Stillwater's Turnaround Ignites, The Upside Is Still There

2025-05-23 08:25:43 ET

Summary

• My recent bullish call on SBSW played out with a 45% gain, driven by cyclical turn, cost cuts, and stabilizing PGM prices; rally expected to continue.
• Despite FY24 revenue dips, cost controls improved EBIT. EBITDA stabilized, with SA gold operations booming (+216% YoY in H2) and set to dominate 2025 earnings.
• Strong liquidity, debt below 1.1x pro-forma, US tax credits, and massive EPS revisions (FY26 up from $0.04 to $0.64) fuel optimism and low forward P/E ratios.
• PGM deficits signal price normalization. The Reldan recycling acquisition taps a booming market, while US PGM operations aim for significantly lower AISC.
• Despite auto transition risks, SBSW's FY26 P/E under 5x is too low. Valuation suggests a ~$9.84 target, offering >64% upside; "Buy" rating reiterated.

Intro & Thesis

I initiated my investment coverage of Sibanye Stillwater Limited ( SBSW ) in late May 2024 with a "Buy" rating, arguing that the cyclicality was about to turn. Then I updated mt rating in mid-September last year after SBSW corrected sharply; at the time, I thought that SBSW had likely found the bottom of its correction and that it was destined to rise up with even slight positives coming from its underlying commodities markets. I also argued that SBSW's cost-cutting measures should help it boost its bottom line meaningfully as the PGM metal pricing stabilizes....

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