Sylvania Platinum increased to 3.8% in JIC Portfolio

Sylvania Platinum: (SLP.L, AIM All-Share, Market Cap £125m, 44.75p, 3.8% of JIC Portfolio and 0.0 of JIC Top 10)

I bought Sylvania Platinum for the JIC Portfolio last September and gave it a High Risk/ High Reward rating, suggesting for me a 2.5% position. 

In what might be a lapse of discipline, I am going to fudge the issue by going halfway! I’m rating it Medium/High Risk and increasing the position to 3.75% of the Portfolio. Time will tell whether that was foolhardy or not.

It is up 24% so far. Its Q1 update for the quarter ending 30th September was positive with net revenue up 54%. We are due another update before the end of the month.

I have been struggling with this one because my High-Risk rating prohibits me from adding and yet I think the shares are going higher. The platinum price has been strong, and it surely must be doing very well at the moment. I expect next week’s update to be good.

On Stockopedia it has the highest StockRank of all my holdings at 98, (Quality 96, Value 63 and Momentum 98. For what it’s worth, simplywall.st thinks it is 70% undervalued!

Earnings forecast have been upgraded and I think there is more of that to come.

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Valuation looks attractive with a forecast dividend yield of 5.0% for the year ending June 2020. If the shares were revalued so that it stood on a 4.0% yield, that would be 20% capital appreciation plus 5.0% dividend income; hence my High Return rating.

It is difficult to argue that the Risk rating should not be High, but the balance sheet is strong, and the platinum price is nearer the bottom of a 17-year range than the top. It looks like it might break out above $1020.

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