{"id":17929,"date":"2023-06-04T04:50:55","date_gmt":"2023-06-04T08:50:55","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/silvercorp-a-stronger-year-ahead-and-an-attractive-acquisition-on-the-horizon-nysesvm\/"},"modified":"2023-06-04T04:50:56","modified_gmt":"2023-06-04T08:50:56","slug":"silvercorp-a-stronger-year-ahead-and-an-attractive-acquisition-on-the-horizon-nysesvm","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=17929","title":{"rendered":"Silvercorp: A Stronger Year Ahead And An Attractive Acquisition On The Horizon (NYSE:SVM)"},"content":{"rendered":"
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Introduction<\/h2>\n

Silvercorp Metals Inc. (NYSE:SVM<\/span>, TSX:SVM:CA<\/span>) is a Canadian mining company primarily focused on silver. More than half of its revenues come from silver, with the remainder from lead and zinc. The company operates mainly in China, specifically in the Ying Mining District in the Henan Province and the GC Mining District in the Guangdong Province.<\/span><\/p>\n

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\"Revenue<\/span>
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Revenue share by metal (Company’s Presentation)<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Since my initial coverage of Silvercorp back in September, the stock has delivered a return of approximately 35%, outperforming both silver (which is up 22%) and the Global Silver Miners ETF (which is up 17%). In April, the stock was up over 75%. However, the recent decline in silver prices, driven by a stronger US dollar and rising yields, has led to a sharp sell-off.<\/p>\n

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Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

Despite the recent downturn, the investment thesis has been successful thus far. This can be attributed to the prevailing pessimism surrounding precious metals miners last fall and the discounted valuation at which Silvercorp was trading in relation to its peers. With 10-year bond yields likely having peaked in October, China reopening its economy, and a more bullish outlook for precious metals, Silvercorp has rebounded. The stock still offers significant potential, as it remains 65% below its all-time highs in 2020 and trades at an EV\/FCF multiple below 5x. Moreover, the management is anticipating a much stronger year ahead from an operational point of view. The acquisition of Celsius Resources is also a potential game changer.<\/span><\/p>\n

FY 2023 Results<\/h2>\n

Historically, Silvercorp has faced a significant valuation discount compared to its peers, primarily due to its operations being located in China and the ongoing US-China geopolitical tensions. Currently, the company is trading at an EV\/trailing EBITDA multiple of around 5x, while the peer average stands at 15.6x. Similarly, the price\/trailing cash flow per share multiple for Silvercorp is 7x, whereas the peer average is 51.5x. Other headwinds have included delays in the construction of the New Mill at Ying, disappointing performance at GC, and a decline in zinc production.<\/p>\n

Reviewing the recently released FY 2023 Financial Statements, Silvercorp’s results were slightly below expectations. The company faced tough comparisons relative to the previous year when metal prices were higher. It was also impacted by rising costs and lower grades.<\/p>\n