AAC Clyde Space — Back on track

AAC Clyde Space (OMX: AAC)

Last close As at 12/11/2024

SEK45.95

−1.85 (−3.87%)

Market capitalisation

SEK271m

More on this equity

Research: Industrials

AAC Clyde Space — Back on track

AAC Clyde Space (AAC) remains an interesting avenue into the fast-growing low Earth orbital space sector. A strong Q324 performance has seen the supplier-related issues that affected Q2 largely reversed, albeit the supply chain remains stretched. The order book is strong, which, with two satellite launches due in Q4, offers the potential to build momentum into 2025.

David Larkam

Written by

David Larkam

Analyst, Industrials

Industrials

AAC Clyde Space

Back on track

Q324 results

Aerospace and defence

11 November 2024

Price

SEK45.4

Market cap

SEK268m

SEK10.9/$, SEK14.0/£

Adjusted gross cash (SEKm) at 30 September

25.4

Shares in issue

5.7m

Free float

88.0%

Code

AAC

Primary exchange

Nasdaq First North Premier Growth Market

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

33.9

12.7

37.0

Rel (local)

35.8

8.7

9.3

52-week high/low

SEK58.0

SEK31.5

Business description

Headquartered in Sweden, AAC Clyde Space is a world leader in nanosatellite end-to-end solutions, subsystems, platforms, services and components, including supply to third parties. It has production and development operations in Sweden, Scotland, the Netherlands, the United States and Africa.

Next events

FY24 results

20 February 2025

Q125 results

24 April 2025

Analyst

David Larkam

+44 (0)20 3077 5700

AAC Clyde Space is a research client of Edison Investment Research Limited

AAC Clyde Space (AAC) remains an interesting avenue into the fast-growing low Earth orbital space sector. A strong Q324 performance has seen the supplier-related issues that affected Q2 largely reversed, albeit the supply chain remains stretched. The order book is strong, which, with two satellite launches due in Q4, offers the potential to build momentum into 2025.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/22

196.7

(23.2)

(5.6)

0.0

N/A

N/A

12/23

276.6

(18.4)

(4.2)

0.0

N/A

N/A

12/24e

375.0

(8.1)

(1.4)

0.0

N/A

N/A

12/25e

600.0

44.5

7.6

0.0

6.0

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Q3 performance: A strong pick-up

Q324 reported a positive turnaround from the issues, largely external supplier orientated, that affected Q2. Net sales were up 58% on Q2 and 51% on the previous year. Gross margin was strong at 72% and, with controlled personnel and SG&A costs, EBITDA margins rebounded to 20.6% and operating margin to 8.0%. Cash conversion was 133% of operating profit after working capital outflow of SEK6m to support the top-line expansion. After investing SEK11.3m and financing costs of SEK9.3m the group ended the quarter with gross cash of SEK25.4m and available cash of SEK81.5m, including an unused banking facility. The order book at the period end stood at SEK641m, marginally down from the record SEK660m at the end of June.

Strategic momentum continues

The flow of new orders remains positive. The largest in the quarter being a SEK11.6m order for four Starbuck power systems and related services. There were two major launches in Q3: a further maritime services satellite to expand space data as a service (SDaaS) capabilities and an Arctic Weather Satellite equipped with multiple AAC products including microwave sounder instruments, a Starbuck power system and Sirius computer. Q4 is set to provide further milestones including the upcoming launch of two further satellites.

Valuation: Unchanged at SEK278/share

Our discounted cash flow valuation of SEK278/share remains unchanged (see our August note for details). This suggest significant upside but clearly there are risks and uncertainties for a company such as AAC at its current stage of development operating in a fast-moving and frontier sector such as space. Contract wins highlight that AAC is well positioned while the SDaaS business provides the opportunity to develop lucrative recurring revenue streams.

Q324 results

Operational highlights

Key for the quarterly financial performance was recovering from the supplier delays and other issues that affected Q2, which, as highlighted below in the financial performance table, was successfully achieved. Order intake remained positive, as outlined later, with an order book at the period end of SEK641m, less than 3% below the record level reported at the half year.

Highlights in the quarter included:

The launch of another maritime services satellite (Sedna-1) to enhance the range of services that can be supplied to maritime customers. The constellation now contains 9 satellites with another 1 waiting launch and 2 in manufacturing.

The launch of an Arctic Weather Satellite equipped with multiple AAC products including microwave sounder instruments, a Starbuck power system and Sirius computer. This is the first satellite in a new array offering future potential opportunities.

The acquisition of Spacemetric was completed, which will deepen the capabilities of AAC’s data business, expanding the SDaaS division.

A licence with a US company for the manufacture of power and data handling systems, leading to a one-off payment of US$2.0m, replacing an existing royalty agreement.

The final quarter of the year is expected to see significant operational milestones including two satellite launches in November.

Financials

Q3 reported strong overall performance, recovering from Q2 which was affected primarily by external supplier issues. This is highlighted by the strong core sales performance, up 58% on Q2 and 51% on the previous year. Gross margin remained strong at 75% and with controlled additional personnel (period end 196 vs 185) along with controlled SG&A costs delivered a strong EBITDA margin of 18.4%, ahead of the full year target of 5–10%, leading to a positive operating margin of 7.2%.

Exhibit 1: Summary performance (SEKm)

Q323

Q324

Change

Net sales

56.131

84.811

51%

Other income

5.677

5.956

5%

Own work capitalised

6.395

4.240

-34%

Total

68.204

95.007

39%

Raw materials & subcontractors

(8.974)

(23.672)

164%

Personnel costs

(38.937)

(41.131)

6%

Other external expenses

(10.331)

(9.612)

-7%

Other operating expenses

(3.251)

(3.112)

-4%

EBITDA

6.711

17.480

160%

Depreciation & amortisation

(7.669)

(10.682)

39%

Underlying EBIT

(0.958)

6.798

N/A

Financing income/(costs)

(1.471)

0.852

N/A

Underlying PBT

(2.429)

7.650

N/A

EPS (SEK)

(0.48)

1.34

N/A

Gross margin

84.0%

72.1%

-1192bps

EBITDA margin

12.0%

20.6%

+865bps

EBIT margin

-1.7%

8.0%

+972bps

Source: AAC Clyde, Edison Investment Research

Cash performance benefited from the improved operating performance. Despite the working capital required to support the top line, cash flow from operations was strong with conversion from EBIT of 133%. Investing and financing outflows led to a net cash outflow in the quarter, leaving the group with gross cash of SEK25.4m at the period end.

Exhibit 2: Cash flow (SEKm)

Q323

Q324

Change

Cash generated from operations

7.297

15.298

110%

Changes in working capital

(9.534)

(5.968)

Cash flow from operations

(2.237)

9.330

Investing activities

(12.581)

(11.315)

Financing activities

24.618

(9.306)

Net cash flow

9.800

(11.291)

Cash and equivalents at end of period

22.677

25.427

12%

Source: AAC Clyde, Edison Investment Research

Divisional performance

Exhibit 3: Quarterly divisional breakdown

Q323

Q324

Change

Sales by division

AAC Data & Services

4.809

6.095

27%

AAC Missions

7.740

23.339

202%

AAC Products

48.118

63.586

32%

Eliminations

-4.536

-8.209

81%

Total core sales

56.131

84.811

51%

EBITDA by division

AAC Data & Services

3.275

0.878

-73%

AAC Missions

-8.900

-0.055

-99%

AAC Products

19.071

22.325

17%

Other segments

-5.901

-4.470

-24%

Eliminations

-0.835

-0.925

11%

Total

6.711

17.480

115%

EBITDA margin by division

AAC Data & Services

68.1%

14.4%

AAC Missions

-115.0%

-0.2%

AAC Products

39.6%

35.1%

Total

12.0%

20.9%

Source: AAC Clyde

Exhibit 4: Divisional sales (SEKm)

Source: AAC Clyde

Order book and intake

The order book has reduced marginally in the period from the record SEK660m at the half year to SEK641m, due in part to the strong sales in the period. The backlog remains at an elevated level, less than 3% off the all-time high. Key recent wins include:

The first order for the Cyclops Earth observation satellite constellation through a pre-commercial agreement valued at £612k (c SEK8.3m) with the Scottish government. The two-year project will provide high-resolution image data enabling, among many other applications, the efficient monitoring of tree health.

A €1.025m (c SEK11.6m) order for four Starbuck power systems and related services. AAC expects to have completed delivery of the order in the second quarter of 2025.

A US$0.69m (c SEK7.1m) order for reaction wheels to be used on a number of small satellites. The order comes from a US blue chip company and follows an order received in February 2023 on the same type of equipment.

A €0.5m (c SEK5.8m) order for a Starbuck power system for small satellites and related services expected to be delivered by the third quarter of 2025.

Exhibit 5: Order backlog (SEKm)

Source: AAC Clyde

Outlook and expectations

Management guidance for the year is unchanged with revenue of SEK350–400m and EBITDA margins of 5–10%. Clearly this will require a positive Q4, which the order book and Q3 performance support although management notes that it is somewhat dependent on the timing of deliveries from key suppliers in order to achieve milestones on major projects, in a supply chain that remains stretched. There are no changes to our forecasts for the full year.

Valuation

There is no change to our valuation as per our last note in August.


Exhibit 6: Financial summary

SEKm

2021

2022

2023

2024e

2025e

Year-end December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

Net sales

 

 

180.0

196.7

276.6

375.0

600.0

Own work capitalised and other operating income

30.9

47.0

48.8

26.8

39.0

Group income

210.8

243.7

325.5

401.8

639.0

EBITDA

 

 

(12.4)

(30.0)

1.0

24.9

75.0

Operating Profit (before amort. and except).

 

 

(21.9)

(40.3)

(12.5)

(5.1)

50.0

Intangible Amortisation

(0.9)

(0.7)

(2.6)

(1.5)

(2.4)

Other

(15.8)

(26.0)

(21.7)

(21.7)

(21.7)

Operating Profit

(38.6)

(67.0)

(36.8)

(28.3)

25.9

Associates & Other

0.0

0.0

0.0

0.0

0.0

Net Interest

(4.2)

17.9

(4.2)

(1.6)

(3.1)

Profit Before Tax (norm)

 

 

(27.0)

(23.2)

(19.3)

(8.1)

44.5

Profit Before Tax (FRS 3)

 

 

(42.8)

(49.1)

(41.1)

(29.8)

22.8

Tax

3.3

2.6

(0.5)

1.5

(1.1)

Profit After Tax (norm)

(24.9)

(22.0)

(18.4)

(7.7)

42.3

Profit After Tax (FRS 3)

(39.5)

(46.5)

(41.6)

(28.3)

21.7

Average Number of Shares Outstanding (m)

3.5

3.9

4.8

5.7

5.7

EPS - fully diluted (SEK)

 

 

(7.17)

(5.58)

(4.16)

(1.35)

7.59

EPS - normalised (SEK)

 

 

(7.17)

(5.58)

(4.16)

(1.35)

7.59

EPS - (IFRS) (SEK)

 

 

(11.36)

(11.82)

(8.73)

(4.97)

3.97

Dividend per share (SEK)

0.0

0.0

0.0

0.0

0.0

EBITDA Margin (%)

-6.9

-15.2

0.4

6.7

12.5

Operating Margin (before GW and except.) (%)

-12.2

-20.5

-4.5

-1.3

8.3

BALANCE SHEET

Fixed Assets

 

 

681.0

728.6

746.2

728.2

728.3

Intangible Assets

639.5

665.5

672.6

668.1

668.0

Tangible Assets

26.4

46.4

57.8

44.3

44.5

Right of use asset

15.1

16.8

15.8

15.8

15.8

Investments

Current Assets

 

 

193.4

152.8

192.2

199.8

321.8

Stocks

13.2

20.2

22.1

29.9

47.9

Debtors

23.0

24.5

23.5

31.9

51.0

Cash

96.1

52.1

59.5

20.0

34.1

Other

61.1

56.0

87.1

118.0

188.8

Current Liabilities

 

 

(129.2)

(182.0)

(249.4)

(267.2)

(353.5)

Creditors

(128.5)

(175.8)

(218.7)

(261.7)

(348.0)

Lease liabilities

0.0

(5.5)

(5.5)

(5.5)

(5.5)

Short term borrowings

(0.6)

(0.7)

(25.2)

0.0

0.0

Long Term Liabilities

 

 

(16.6)

(35.9)

(26.2)

(31.9)

(45.0)

Long term borrowings

0.0

0.0

0.0

0.0

0.0

Lease liabilities

(15.1)

(11.0)

(10.2)

(10.2)

(10.2)

Other long term liabilities

(1.5)

(24.9)

(16.1)

(21.8)

(34.9)

Net Assets

 

 

728.6

663.5

662.8

628.9

651.6

CASH FLOW

Operating Cash Flow

 

 

(37.3)

6.4

11.1

21.7

67.5

Net Interest

(0.2)

(0.2)

(2.9)

(1.6)

(3.1)

Tax

2.1

0.2

(1.3)

0.0

(1.1)

Capex

(29.2)

(40.9)

(51.0)

(35.3)

(49.2)

Acquisitions/disposals

2.6

(38.3)

(2.5)

0.0

0.0

Financing

94.1

33.3

37.6

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

Other

0.0

(2.0)

0.0

0.0

Net Cash Flow

32.0

(39.4)

(11.0)

(15.1)

14.1

Opening net debt/(cash) excluding lease liabilities

 

 

(62.2)

(95.5)

(52.1)

(35.1)

(20.0)

HP finance leases initiated

0.0

Other

1.3

(4.0)

(6.0)

0.0

0.0

Closing net debt/(cash) excluding lease liabilities

 

 

(95.5)

(52.1)

(35.1)

(20.0)

(34.1)

Net financial liabilities including lease liabilities

 

 

(80.4)

(35.6)

(19.5)

(4.3)

(18.4)

Source: Edison Investment Research


General disclaimer and copyright

This report has been commissioned by AAC Clyde Space and prepared and issued by Edison, in consideration of a fee payable by AAC Clyde Space. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom


General disclaimer and copyright

This report has been commissioned by AAC Clyde Space and prepared and issued by Edison, in consideration of a fee payable by AAC Clyde Space. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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Research: Metals & Mining

Wheaton Precious Metals — Record quarterly cash flow

Wheaton Precious Metals’ (WPM’s) Q324 results, announced 7 November, showed a less than 1% variance for the quarter relative to our forecasts at the earnings level. Notably, however, three mines (Constancia, Stillwater and Voisey’s Bay) outperformed our expectations in terms of production but underperformed in terms of sales. This arguably sets up the potential for a rebound in Q4 when Wheaton’s streaming partners traditionally flush through sales ahead of the end of the financial year. Note that, at current metals prices, our EPS forecast for FY25 would be US$1.68 per share compared to the base case of US$1.23 per share.

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