December 2018


Stock I'm watching this month:-

PLS - Pilbara Minerals Ltd

Sector: Basic Materials
Market Cap: 1.1 Billion
Price/Earnings: N/A
Price/Book: 3.23
Return On Equity: N/A
Return On Assets: N/A
Debt/Equity: 38.21%

Reasons to watch: Pilbara Minerals is a lithium miner and has just started production in FY2018. As you can see from the valuations there is not much data that can be used for analysis (hence the risk in owning this stock). Lithium is forecasted to be an important resource once Electric Vehicles become mainstream but I think it might take at least another 5 or 6 years for that to happen. Therefore, this is considered an early entry into investing in this resource. If the Electric Vehicle industry does take off, then Pilbara Minerals is expected to be one of the leading companies to reap the rewards. At the moment, Pilbara Minerals is considered to have one of the largest lithium mines (probably top 10 in the world) and is already in the production phase. It also has 4 guaranteed off-take partners, which will provide consistent cash flow over the years. There is a potential JV with POSCO to develop and operate a lithium hydroxide/carbonate conversion plant, which will allow Pilbara Minerals to take its investment further downstream.

Risk: With the current trade war, global growth is expected to slow. This might delay the development of the Electric Vehicle industry. Also, newer battery technologies (that does not require lithium) might be developed which could supersede the demand of lithium in the future.

Sentiment: Buy
Disclosure: Held
My Strike Price: $0.7 (Morningstar Fair Value: $0.93)

Disclaimer: This does not constitute any financial advice or stock recommendations. As always, Do Your Own Research.






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