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Trade Ideas

Local Trade Idea: Valterra Platinum (VAL) - BUY

 

By Peet Serfontein & Khumbulani Kunene

Valterra Platinum is a South African-based company operating within the platinum group metals (PGM) sector, contributing to one of the country's most strategic and globally significant mining industries. The company explores and produces platinum, palladium, rhodium, iridium, ruthenium, osmium, copper, nickel, cobalt sulphate, sodium sulphate, chrome, and gold. Valterra Platinum serves customers worldwide.

Founded in 1995, Valterra Platinum produces around 2.4 million ounces of platinum and about 1.4 million ounces of palladium annually. The company leverages South Africa's mineral reserves and focuses on the exploration and development of high-grade platinum assets, with an emphasis on sustainability and responsible mining practices. VAL demerged from Anglo American in May 2025.

Technically, a price in a developing round top pattern makes the share an interesting candidate for a long position (see the insert on the main chart as well as the curved image overlays on the price). This signal often signifies a gradual shift from a bearish trend to a more constructive and accumulation-driven environment. Also referred to as a "saucer bottom", this pattern reflects a slow and steady transition in sentiment from bearish to bullish.

A price in the accumulation phase of the Wyckoff Price cycle also adds support. Additionally, a sideways price can be regarded as a bullish support zone when it occurs after a bullish upward trend as it may suggest that investors are holding their positions rather than taking profits. Balance between demand and supply sets precedent for a next leg higher.

Upside momentum, according to the Moving Average Convergence Divergence (MACD) histogram indicator, supports our bullish stance.

We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R904.00.

Share Information
Share Code VAL
Industry Materials
Market Capital (ZAR) 220.49 billion
One Year Total Return 41.24%
Return Year-to-Date 60.34%
Current Price (ZAR) 831.12
52 Week High (ZAR) 850.00
52 Week Low (ZAR) 465.93
Financial Year End December
The price is above its 200-day simple moving average (SMA) of R660.73, suggesting that the overall bias remains positive.

Consensus Expectations (Bloomberg)
FY24 FY25E FY26E FY27E
Headline Earnings per Share (ZAR) 32.05 33.99 53.84 58.46
Growth (%) 6.05 58.42 8.58
Dividend Per Share (ZAR) 71.75 13.57 21.84 25.56
Growth (%) -81.08 60.91 17.05
Forward PE (times) 24.45 15.44 14.22
Forward Dividend Yield (%) 1.63 2.63 3.08
Medium-term growth prospects remain positive, with strong momentum expected over the next few financial periods.

Buy/Sell Rationale:

Technical Analysis:

    • The lower panel depicts occurrences of the Three Outside Up Japanese candlestick pattern, denoted by a reading of one. This pattern can support a bull case as it signals a strong reversal from a prior downtrend or consolidation phase. This three-candle formation begins with a bearish candle, followed by a larger bullish second candle that fully engulfs the first, and a third candle that closes higher than the second (see the insert). It reflects a clear shift in sentiment from bearish to bullish.
    • An increase in volume adds credibility to the reversal scenario.
    • The recent upwards trajectory of the on-balance volume (OBV) indicator supports a bullish case for the share.
    • Our entry range is between R696.00 and R904.00 with an upside target of R1 063.00 (+25.1% from current levels).
    • Time to exit is mid-September 2025. Keep the option open to close the trade if the price reaches our profit target in a shorter time.
    • A price below R742.00 (-12.7% from current levels) is a major concern for downside potential and is recommended as a stop-loss.

Long-term Fundamental view

    • Valterra Platinum operates through three segments, namely:
      • Purchase of concentrate (~36% of revenue) which refers to the purchase of PGM concentrate from third parties that is then refined and sold by VAL.
      • Mining of precious metal ores (~63% of revenue) incorporates mining operations like Mogalakwena and Amandebult.
      • Trading & machinery distribution (~1% of revenue) which includes handling the trading of metals, and related equipment and machinery services.
    • VAL demerged from Anglo American in May 2025 and is focused on cost-saving initiatives and operational efficiencies. For now, the company is avoiding any M&A activity and is focused on maximising returns from its existing mining and refining portfolio.
    • While the company does not disclose its biggest customers, it sells product to be used in the production of automotive catalysts, industrial and chemical catalysts, green hydrogen and jewellery.
    • In FY24, net revenue declined 13% to R109 billion due to an 11% weaker PGM dollar basket of $1 468 per PGM ounce. EBITDA fell 19% to R19.8 billion during the period and was impacted by a decline in PGM prices and unfavourable foreign exchange movements.
    • Management expects to maintain the 2024 target cost run into 2025 to offset inflation and deliver ~R4 billion in savings. Management will also focus on higher-margin processing of own material and expects a reduction in third-party volumes over the next few years.
    • Recent price movement in PGMs has been positive as the market has begun pricing in a meaningful supply deficit expected over the next few years. As such, earnings expectations for sector players have improved, and momentum in the share price is positive.
    • From a risk perspective, VAL remains exposed to commodity price volatility, particularly with PGMs. Instability in the local regulatory space remains a challenge as most of the company's assets are in South Africa and power supply disruptions may also result in lower production.

Share Name and Position ABG - Buy
(Continue to hold)
QLT - Buy
(Continue to hold)
GRT - Buy
(Continue to hold)
Entry 171.50 35.27 13.22
Current Price 179.60 36.82 13.78
Movement +4.7% +4.4% +4.2%
Comment A favourable peer comparison remains of interest. Continues to test its 200-day SMA. Upside momentum is supportive.

Our profit target is R200.00 with a trailing stop-loss at R164.00.
A price at the start of Wave 5 of the Elliott Wave theory remains of interest. Remains above its 200-day simple moving average. Fading upside price momentum is a concern.

Our profit target is R41.00 with a trailing stop-loss at R33.00.
The price is in one of the highest price bins of the price distribution analysis. Remains above its 200-day simple moving average. Upside momentum is supportive.

Our profit target is R16 with a trailing stop-loss at R12.20.
Time to exit 14 July 2025 14 July 2025 17 November 2025

Share Name and Position COH - Buy
(Continue to hold)
BID - Buy
(Continue to hold)
STXFIN - Buy
(Continue to hold)
Entry 8.82 458.43 21.75
Current Price 9.11 461.00 21.78
Movement +3.3% +0.6% +0.1%
Comment A price at a key distribution level remains of interest. Remains above its 200-day simple moving average. Muted upside price momentum is supportive.

Out profit target is R10.50 with a trailing stop-loss at R8.45.
A sustained bounce off the lower one standard deviation band, ongoing support from the broader upward trend and signs of renewed buying interest remains of interest. Remains above its 200-day SMA. Muted upside momentum is supportive.

Our profit target is R528.00 with a trailing stop-loss at R434.00.
A price above major support is of interest. Remains just above its 200-day SMA. Fading upside momentum is a concern.

Our profit target is R25.00 with a trailing stop-loss at R20.55.
Time to exit 22 August 2025 30 August 2025 15 September 2025

FNB Stockbroking and Portfolio Management (Pty) Ltd, a subsidiary of FirstRand Bank Limited, an authorised Financial Services Provider and authorised user of the JSE limited (Reg no: 1996/011732/07). This Publication note is issued by FNB Stockbroking and Portfolio Management (Pty) Ltd for the information of clients only and should not be produced in whole or part without prior permission. Although FNB Stockbroking and Portfolio Management (Pty) Ltd is an Authorised Financial Services Provider, any opinions and/or analysis contained in this Publication are for informational purposes only and should not be considered advice, including but not limited to financial, legal or tax advice, or a recommendation to invest in any security or to adopt any investment strategy. The information contained herein has been obtained from sources/persons which we believe to be reliable but is not guaranteed for correctness, completeness or otherwise and we do not assume liability for loss arising from errors in the information or that may be suffered from using or relying on the information contained herein irrespective of whether there has been any negligence by us, our affiliates or any other employees of us, and whether such losses be direct or consequential. As market and economic conditions are subject to rapid change, any comments, opinions, and analysis is rendered as of the date of publishing and may change without notice. Such changes may have a material impact on the outcome of any investment. Securities involve a degree of risk and are volatile instruments. Past performance is not indicative of future performances. Securities or financial instruments mentioned in the Publication note may not be suitable for all investors and FNB Stockbroking and Portfolio Management (Pty) Ltd has bares no responsibility whatsoever arising from or as a consequence hereof. The material is not intended as a complete analysis of every material fact regarding any share, instrument, sector, region, market, country, investment, or strategy. The recipient of this Publication must make their own investment decision and is advised to contact his relationship manager for a personal financial analysis prior to making any investment decisions. Copyright 2018 by FNB Stockbroking and Portfolio Management (Pty) Ltd.

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