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Insintric Value and fundamentals of MTA good, but price dropping, any info?

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AHS
New Contributor
a Value of R35.55/SHARE - about 48% under valued at current price levels, Earnings growth rate of 25% Sales growth rate of 17% EY 12.17% PE 8.22 Good fundamentals and price momentum aswell, but can anyone tell me why the price is dropping? Just profit taking or is there some other reason in the market? Would appriciate any info, thanks.
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48 REPLIES 48
Super Contributor
Car demand is very poor - a recession is looming large - hence platinum shares imploding - MTA is following. It did run 600%up in 2,5 years. So a pullback is hardly out of the ordinary.
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Not applicable
I see little or no evidence of poor car demand. The new motor industry development plan replacement has come into effect, which should favour the component manufacturers. MTA makes almost no money on export demand, so they are pegged to the local industry, which seems to be fairly robust still.
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Super Contributor
European, Japanese, Australian, Chinese and fugures disappointed - (as did SA's.) MTA supplies companies that export so you do the maths. Her price includes ROMBAT which manufactures and supplies in Europe.
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Super Contributor
I fully accept (and expect) a near-term recession, and a knock to plat company prices. Two thoughts, though. One, unless you're trading for a near-term gain (a year or so), that's a great time to buy. When the recession hits and everyone hates platinum, I'm buying. Two, there's a ton of oil supply able to come onto the market because of many reasons (shale, etc etc). That'll prevent oil from getting too high for ages. Oil is a compliment to platinum, and a low oil price guarantees that platinum will be used in catalytic converters for a good while.

What does bother me is political risk, with the local handout machine wanting to fill their pockets with nice lucre. That's the elephant-with-five-wives in the corner.
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Super Contributor
WELLL... Drop in oil price is due to drop in demand - drop in demand is due to drop in use. Drop in use means less need for new cars. Drop in use is due to a poorer economy and hence, lower demand for new cars. All this means weaker demand for platinum. Personally, from a long-term point of view, I don't like oil and I like platinum even less.
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Super Contributor
As for political risk - (mines or industrials) - I agree: this is profound! Quite honestly - one shouldn't be buying S.African stocks or S.Africa anything else for that matter.
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Super Contributor
I was hoping you'd answer - the issue does deserve some critical insights. But here's the thing:
1) Demand, if down, is temporarily so. I'm not sure what world events have to happen to permanently dampen oil demand, but it hasn't happened yet. I'm all about the nice green cars, but that'll take a while to really affect the market *especially* if oil prices don't stay super-high.
2) Price is affected by both supply and demand, obviously. So we have a temporary demand drop and a semi-permanent (multi-decade) supply increase. Therefore, prices won't skyrocket permanently. The supply issue won't prevent a spike but it will act to reduce the price.

What I'd most like is a platinum producer that isn't directly affected by the SA government. Because if the SA government nationalises the local platinum mines, their productivity will tumble like a Zim farm and prices will skyrocket, leaving competing producers to print money.
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Super Contributor
The world is working to remove oil-dependance. There is a move toward recognition of environmental parties at a national level. This can also be seen in the emergence of The Natural law in a move toward homogenising international legal systems. Many cities are banning cars outright. Nevermind battery cars, air travel is threatened by austerity and trains are the investment de jour (ironic isn't it.) You need look no further than his eminence, W Buffet for a show of confidence in this form of conveyance. Also note that natural gas: - high-energy, clean, ubiquitous and ultra cheap; and pretty much usable as is in current cars (with some tweaks,) is availabe at a fraction (Or should I say FRACKtion) of the price of petrol. Another real concern is the ability of the world to sustain this juggernaut emergence of the erstwhile "voiceless masses." We may need to find a way to put it back in its box, as it were. If that happens (or even beins to happen) oil could be destroyed.
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Super Contributor
OIL companies the world over are telling this story. For trading, however, why not?
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Super Contributor
It is in the oil producers interest for the oil price not to be too high as it encourages investment in alternatives. They will therefore keep the taps open to moderate the price further. Oil does not only get used to manuafacture petrol (12% of total production if I remember correctly) but is used in a host of other applications. So, longer term expect price to drift lower until something happens at a oil producing country that may affect supplies and whammy, up she goes again. That is how reliant this energy consuming world is on oil, and i.m.o will still be for a long time until alternatives have a much bigger impact.
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Super Contributor
The risk isn't that the price of oil will drop hugely, it's that it jumps and everyone moves wholesale to alternatives. All these alternatives will just push the price down, keeping oil competitive, and Asia's going to be a factor for 2 decades at least. If half of all cars in the next 20 years use alternatives, that's still serious growth. And some alternatives use platinum as well, like hydrogen, and, it turns out, catalytic converters for natural gas engines. Lots of things have to happen before platinum is as useless as gold is.

To me, the green trade is an obvious winner, but it's too obvious so I think near-term fears are likely to hurt platinum more than it deserves. These things take time to roll through the worldwide economy and, like smoking, the profits aren't going to disappear overnight.
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Super Contributor
Ever since the oil crisis in 1973 have we squeeled about the oil price and going to find alternatives, and 30 years down the line we have made little progress. It's not in the oil producing countries interest to price themselves out the market, just as they cannot afford to let the price drop to ridiculously low levels. The Saudis only need to half shut the tap for a short while to start moving the price up again. Let's not forget it's summer in the northern hemisphere and the world economy is sluggish, so in the medium to long term I think oil and gas (energy) will be in an upward trajectory. as for it being expensive when one thinks of the cost of bring it to the surface, shipping it half way around the world, refining it and then compare it to a litre of water, add sugar and colouring and call it "Coke" at the same price, oil is still a bargain
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Super Contributor
First of all - gold is insulated by her, as you term it: "uselessness." This is another argument that falls outside the scope of the current discussion. Platinum - well let's just say there is nothing sadder than a commodity that has fallen out of favour or, worse still, that nobody has a use for. Oil shocks - well if that happens - Platinum will get an absoute hiding and gold will surge. Oil has only really been with us (in the current sense) since the end of WW1. Who knows how much longer. Investing for the long term requires a degree of certainty that I do not believe the oil producers can offer.
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Super Contributor
Again - while this is not what the discussion is really about - trade oil - yes great. Long term - no thanks. Only time will tell though.
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Super Contributor
As far as I know, energy (mainly transport at 70%,) makes up well over 80% of oil usage.
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Super Contributor
Incidentally - per Bloomberg - oil reserves are at the highest level in history; AND we are still floating on an "easing cushion." No thank you - I can find safer places to play than oil.
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Super Contributor
If oil crashes - the banks will follow. There will be chaos in the middle east and North Africa. Gold will spike. If oil surges - everything industrial will get a smack. Inflation will fly and gold will spike. I really don't care how "useless" gold is perceived to be. It has played the a role of "currency of last resort" for 5 000 years. Why should that change? "Trade the Price" is the mantra of many on this forum. I say "don't bet against 1000's of years of history."
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Super Contributor
This is a form of tautological reasoning; for it is just as correct to reason that COKE is simply too expensive. Actually it about the value of the brand and simply creating a a price the market will bear. ALSO the market for COKE IS tiny. The market for oil is relatively galactically huge.
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Highlighted
Super Contributor
Yes, but that's a good thing. That's what I mean by lots of supply being good. So don't buy oil (because there's too much supply), buy platinum because it's out of favour and it's a complement to oil. When the price of a complement goes down, the price of a product goes up.
In any case, that's why it makes a market. But we're both probably quite happy with our positions, I just wanted to check my thinking :)
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