Pilbara Minerals Ltd (ASX: PLS) shares pushed higher on Monday following the release of the miner's full year results.
The lithium giant's shares rose 1.5% to $3.02.
This was despite Pilbara Minerals reporting a 69% decline in revenue to $1,254 million, an 84% decline in EBITDA to $538 million, and an 86% reduction in its underlying profit after tax to $318 million.
This was unsurprisingly driven by a collapse in lithium prices during FY 2024, with the company's realised price falling 74% year on year.
Also coming as no surprise was news that the company would not be paying a final dividend for the year.
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Should you buy Pilbara Minerals shares now?
Bell Potter has been busy running the rule over the company's results and notes that its profits fell well short of expectations. However, it concedes that there was a reason for this. The broker explains:
PLS reported FY24 EBITDA of $538m (BP est. $578m), a 43% EBTIDA margin; and underlying NPAT of $318m (BP est. $361m). The deviation from our estimates was largely due to procurement and construction spend on the mid-stream demonstration plant, required to be expensed while it is considered a research and development project.
One positive was news that the lithium miner has signed an agreement for a major new debt facility. It feels that this shows the maturity of the business. It adds:
PLS has received commitments from a consortium of banks, to provide a new $1b senior secured revolving credit facility. The facility is planned to refinance existing debt, improve financing costs, reduce covenants, and provide greater flexibility to pursue growth opportunities. We estimate the facility takes total pro-forma cash liquidity to ~$2.3b. Additionally, PLS has updated its capital management framework to include a leverage target of less than 1.5x net senior debt/EBITDA through the lithium price cycle.
What's the verdict?
In response to the results, Bell Potter has retained its hold rating and $3.15 price target on Pilbara Minerals' shares. This implies modest potential upside of 3.6% for investors over the next 12 months. It concludes:
PLS is a large, liquid and clean exposure to global lithium fundamentals and sentiment. PLS is a low-cost producer, it operates in a tier one jurisdiction in Western Australia, and has a strong balance sheet ($1.6b cash at 30 June 2024) which can withstand weaker lithium prices and support expansion programs. We are confident that EV-led demand will see strong long-term lithium market fundamentals. Weak near-term lithium market sentiment results in us retaining our Hold recommendation
