EM CEEMEA CREDIT: SGLSJ: FY24 results look weak, but liquidity strong
Sibanye Stillwater (SGLSJ: -/BB-/BB)
FY24 results look weak, but liquidity strong
• Strong momentum in gold price is helping SGLSJ to partially offset weak PGM pricing. Strong liquidity profile means that today’s results shouldn’t have too much of impact on spreads.
SJ reported weak FY24 results with revenues of ZAR112.1bn vs BBG est of ZAR14.08bn, adj-EBITDA of ZAR13.09bn vs BBG est of ZAR14.08bn and a net loss of ZAR5.7bn.
• FCF continued to be weak , but there was an improvement in H224, with FCF consumption of ZAR3.9bn vs ZAR4.8bn for H124 (acq adjusted). However, SGLSJ has a fairly modest balance sheet with net debt to EBITDA of 1.79x at the end of Dec 24 and ample liquidity headroom of ZAR45.7bn, which easily covers the short dated USD675mnn bond maturity in Nov26. We think management may look at refinancing options closer to the time
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CROSS ASSET: Lack of FX Reaction Suggests Lagarde Not A Key Driver Of EQ/FI Bid
President Lagarde’s interview with CNBC did not come across as particularly dovish compared to recent GC commentary or her prior interview with the FT on December 23. Although EUR STIRs have rallied alongside core FI over the past hour, the lack of reaction in EUR FX suggests Lagarde’s views (and ECB monetary policy more generally) have not been a key driver - as noted in earlier commentary.
- Asked about how appropriate the prospect of four 25bp cuts by the June meeting is, Lagarde did not provide a view: “I leave it to them [other GC colleagues] to sort of anticipate and play that game of, you know, so many, at which pace etc”.
- Global equity futures have rallied alongside core FI over the past hour, likely factoring into earlier peripheral/semi-core outperformance versus Bunds.
- Price action here not driven by specific newsflow or headlines, but provides another example of the jumpy short-term nature of markets this week - with the eventful first few days of the Trump administration helping to underpin intraday vol here.
- Major EGB futures have continued to move away from earlier session highs, with Bunds now +8 ticks at 132.02 (vs an intraday high of 132.22).
GILTS: Cross-Market Cues Dominate, Bearish Trend Intact
Gilts continue to take cross-market cues, initially rallying alongside EGBs and European equities, before fading back from highs.
- Futures breached yesterday’s high, peaking at 92.52, but failed to challenge Fibonacci resistance at 92.75. Contract fades back to 92.30 last.
- The overarching technical setup remains bearish, but the recent recovery poses a risk to that trend.
- Bears need to force a move through the Jan 16 low (90.68) to assert fresh pressure.
- Yields little changed to 1bp lower across the curve.
