DRDGold price consolidates interim results news
DRDGold earnings have been supported by the rand price of the underlying commodity
DRDGold Ltd has released interim results for the interim period ending 31 December 2022. Some of the salient features from the 1H23 results (vs 1H22 results) are as follows:
Revenue up 6%
Operating profit down 5%
Earnings per share up 7%
Headline earnings per share up 7%
Interim dividend of 20c (SA) declared (same as comparative period)
The reporting period sees DRDGold having benefitted from a more than double digit gain in the underlying rand price of gold. These gains were however inhibited by ongoing power restraints from State Owned utility operator Eskom. The shortfall in electricity supply sees the group processing less ore than it could have. DRDGold specializes in recovering gold from retreated mining dumps.
DRDGold (JSE Listing) – Technical View
The 20 (red), 50 (green) and 200 (blue) day simple moving averages (MAs) suggest that the longer-term trend bias for the mining company is up.
The share price has however started to retrace from near term highs. The retracement (shaded) has taken the form of a bullish flag formation. A bullish flag formation / pattern suggests a short term pause in directional trend (up) before it is continued.
Traders of the pattern might prefer to wait for a break of the patterns resistance level before committing. A breakout out might be confirmed on a close above resistance. In this scenario, 1475 becomes the initial resistance target, while 1560 provides a possible further target from the move. Traders who find long entry into an upside breakout (should one occur) might consider using a close below 1320 as a stop loss consideration for the trade.
Should the price of DRDGold instead move to close below the 1320 support level before a breakout manages to manifest, we might consider the bullish assumptions to be no longer relevant.
In summary:
DRDGold interim results showed revenue and headline earnings to have increased by mid to high single digits
Earnings were positively affected by a rise in the underlying rand price of gold, partially inhibited by ongoing power constraints from Eskom
The interim dividend was maintained at 20c per share
The longer-term trend bias for DRDGold remains up
In the near term we see a bullish flag continuation having formed
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