NORNICKEL: Non-Deal Roadshow Takeaways – Reiterate BUY
We hosted a series of meetings in Europe with Nornickel represented by IRO Mikhail Borovikov. Thanks to its unique metals basket, the company is well-positioned for China’s environmental tightening, while the mounting number of electric cars could increase high-grade Ni demand by 30-40% in five-to-seven years. To capture the potential demand increase, Nornickel is considering production growth at the Polar Division, including a stage-3 Talnakh upgrade, and brownfield mining expansion at the South Cluster. On MtM prices and today’s RUB FX, the company’s FY18 EBITDA should exceed $5bn, suggesting low risk to the dividend outlook. We reiterate our BUY rating as we find the meeting takeaways supportive of our recent upgrade.
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