Zimplats Holdings Limited (ASX: ZIM)

Zimplats Holdings Limited is a platinum mining company based in Guernsey. It is engaged in producing platinum group metals (PGM) and associated metals, such as nickel, gold, copper, cobalt, and silver mined from the Great Dyke in Zimbabwe.

Recommendation Rationale – Watch at AUD 20.770

• Revenue, Profit Declined: For the year ended 30 June 2023, ZIM reported 23% decline in revenue to USD 962mn, as compared to USD 1.24bn in FY22. Volumes also declined by 3.2% annually as slow economic recovery in China, contractionary monetary policies and high interest rates in most developed economies negatively affected the demand for commodities, including the PGMs.
• PGM Prices Declined: In FY23, price declines were experienced on palladium and rhodium sales while platinum struggled to sustain prices above USD 1,000/oz.
• Market Volatility: The equity market can remain volatile considering rising US bond yield, geopolitical tensions, global economic slowdown, rising crude oil price, among others.
• Production Increased: In FY23, despite economic uncertainty, ZIM recorded a 7% increase in mining output due to improved production at Mupani and Bimha mines.
• Stock Performance: ZIM shares have declined by ~17.75% in the last six months compared to a ~6.80% decline in the broader S&P/ASX 200 index.

ZIM Daily Chart

 (ZIM Daily Technical Chart; Source: REFINITIV)

Noted below are the key price indicators for the stock:

Considering the current market volatility, risks associated and weak macroeconomic outlook, a ‘Watch’ recommendation is given on the stock at the current price of AUD 20.770, as on 26 October 2023, at 11:35 AM, AEDT.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 26 October 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Disclaimer

Kalkine New Zealand Limited is a Financial Advice Provider (“FAP”) and is authorised by a Class 1 Financial Advice Provider Licence issued by Financial Markets Authority (“FMA”) to provide financial advice. Kalkine provides only general financial advice through its research reports following a person becoming a member. The reports contain buy/sell/hold and other recommendations in relation to equity financial products. The recommendations and opinions [on this website] / [in this report] do not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions. If you act on the advice in the research reports, you may have to pay fees, expenses or other amounts (but not to Kalkine).  Further information about the complaints and dispute resolution process, as well as information about Kalkine’s duties are available on Kalkine’s website.  Please read our Financial Advice Provider (FAP) disclosure statement and Complaints Handling Guide, which are available on the website.