Company Analysis: Wesizwe Platinum Ltd.

Having listed in December 2005 and constructing a spectacular return in under eighteen months, this stock held a lot of potential in its formative years listed on the JSE, especially when considering the intensive and growing demand for platinum throughout the world, more particularly in China. 

However the short-lived promise of perpetual prospects was shut down in the upheaval of the Financial Crisis and never to be seen again until recently. 

Since 2010 Chinese investment consortium Jinchuan Group has been a familiar feature in the company after agreeing to a deal  of a 51% stake in the company that has seen a substantial amount of funding poured into strengthening operations. 

Data taken from MoneyWeb
For more information go to: http://www.moneyweb.co.za/tools-and-data/click-a-company/?shareCode=WEZ

With a current price of 91 cents the net asset value indicates this stock is relatively cheap when weighed up against its bigger name competitors. The amount of issued shares has reached over 75% of authorised issue, a possible hindrance to management if it wishes to expand it's strategy into the future. 

This is said against the backdrop of an incredible level of hard work that's been put into the company over the last six years and would be a fresh dilemma if it it fell out of favour due to funding.  

If management were to secure its strategy of recapitalising the business it'll need to show a strong case for it, an event which looks likely in the current standing but vulnerable to change if there is significant shifts in the platinum industry.   

Technical Analysis

Looking at the technicals it isn't hard to observe that the price levels registering current are sitting at two year highs. That's a boost of optimism for the bulls and if price was to sustain itself above the 90 cent level it could be further indication of renewed bullish strength into elevated prices. 

Considerations

Although the setup looks optimal it should be noted that the company only has a market cap of R1.2 billion, a minute size when compared to the likes of Impala and Anglo Platinum. Often companies of this size are found to be fickle in events that take place within it, more specifically the focus around management and not so much the price of platinum. 

Another aspect to weigh up is the non-profitable years of investment into operations which has made it difficult to identify a pertinent trend in sales and earnings.