Platinum Lifts, But Weak Q2 Results Hit Valterra’s Share Rally – Support Holds
Valterra Platinum's meteoric rise, powered by platinum's rally and bullish macro trends, is now under scrutiny following a steep drop in...
Quick overview
- Valterra Platinum's stock surged over 90% due to a rally in platinum prices, reaching a peak of R967.64.
- Despite the price surge, the company reported an 81% drop in half-year profit, primarily due to flooding at a key mine and costs from its demerger from Anglo American Plc.
- The stock has faced a four-day losing streak, raising concerns about waning momentum and the potential for a deeper correction if it falls below key technical support levels.
- Investors are now focused on the company's operational performance, as the divergence between strong platinum prices and weak earnings presents a challenge for regaining confidence.
Valterra Platinum’s meteoric rise, powered by platinum’s rally and bullish macro trends, is now under scrutiny following a steep drop in half-year profit.
Platinum Surge Sparks a Breakout Rally—But Cracks Begin to Show
Valterra Platinum rode the wave of platinum’s strongest price rally in over a decade, with shares rocketing more than 90% between April and late July. The stock broke through long-standing resistance at R800 and peaked at R967.64, supported technically by the 20-day simple moving average (SMA). Investors responded with enthusiasm, driven by platinum climbing to $1,482 per ounce, a level not seen in 11 years.
AMSJ Chart Weekly – Retreating from the 200 SMA
The company attributed the surge in platinum prices to improving global conditions. In its earnings release, Valterra stated that platinum’s gains in the first half of the year “were underpinned by a more favorable macro-backdrop,” adding that “strong Chinese buying, attributed to renewed interest from local jewelry manufacturers and investors, met underwhelming supply given relatively low South African production earlier in the year.”
However, despite those tailwinds, the rally is now facing headwinds. A four-day losing streak has pulled the stock back to R852.37, down 2.59% on the Johannesburg Stock Exchange on Monday. The formation of a doji candlestick late last week, followed by steep intraday reversals, has raised concerns about waning momentum. While the 20-day SMA continues to provide short-term support, a break below it could signal the beginning of a deeper correction.
Profit Collapse Undermines Positive Sentiment
Although platinum prices have carried the stock higher, Valterra’s underlying fundamentals tell a more complicated story. The company reported an 81% drop in half-year profit for the period ending June 30. That decline was largely due to major disruptions at a key mine, which suffered flooding and forced a cutback in production. Additional pressure came from costs tied to the company’s demerger from Anglo American Plc.
This period of transition also marked a major shift in Valterra’s identity. Alongside the spinoff, the company launched a rebrand and secured a secondary listing on the London Stock Exchange. While these moves are seen as long-term positives for global exposure, they came at a cost that weighed heavily on short-term profitability.
Valterra Platinum Ltd. Q2 Headline Results: Profit and Earnings Drop Sharply
- Valterra Platinum Ltd. reported a 91% decline in first-half profit, largely due to flooding at a key mine and expenses linked to its demerger from Anglo American Plc.
- Headline earnings dropped to R1.2 billion, down from R6.5 billion during the same period last year.
- Headline earnings per share (HEPS) fell 81% to R4.73 per share, mainly impacted by demerger-related costs and reduced production levels.
Production and Sales Impacted by Amandelbult Flooding
- Platinum group metal (PGM) sales declined 25% to 1.48 million ounces, primarily due to significant flooding at the Amandelbult operations in February.
- Own mined mining and concentrating (M&C) production, excluding Amandelbult, remained steady at 770,000 ounces, in line with the previous year.
- Refined PGM output for the first half fell 22% to 1.4 million ounces, partly due to reduced concentrate availability and a triennial stock count.
Dividend Slashed Amid Profit Decline
- The interim dividend was set at R2 per share, which represents a 79% cut compared to the same period a year earlier.
Amandelbult Outlook and Recovery
- The Amandelbult operation’s output was down 45% in H1 due to flooding but has since resumed in June.
- Normal production levels are expected to be reached within the current quarter.
- For full-year 2025, M&C PGM production at Amandelbult is forecast at 450,000 to 480,000 ounces.
- Full-year refined PGM production guidance remains unchanged at 3.0 to 3.4 million ounces.
- Normalised output at Amandelbult is projected to be fully restored by 2026.
Stock Slides After Results, But Yearly Gains Intact
Valterra’s recent slide marks the fourth consecutive daily decline, though the overall trajectory remains upward. Even after Monday’s drop to R852.37, the stock is still 22% higher than it was a year ago. Market participants remain cautious, watching closely to see if the price can hold above technical support. If the 20-day SMA holds firm, bullish momentum may resume—but if sellers push the price below that threshold, it could trigger further downside.
AMSJ Chart Daily – Sellers Test the 20 SMA
The steep decline after earnings suggests investors are beginning to look past the platinum rally and focus more on company-specific performance. The divergence between strong commodity tailwinds and weak earnings poses a challenge: Can Valterra regain investor confidence without improving its operational output?
Conclusion: Valterra Platinum’s explosive rise, fueled by platinum’s macro-driven rally and strong Chinese demand, now faces a moment of truth. The company’s weak profit results and ongoing production issues are weighing on the stock, even as broader fundamentals in the platinum market remain supportive. Whether the recent pullback is a brief consolidation or the start of a broader reversal may depend on Valterra’s ability to stabilize operations—and hold above key technical levels in the days ahead.
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