POLYMETAL INTERNATIONAL: Decoupled from Gold Price – Reiterate BUY
Gold has rallied 10% since mid-July, but Polymetal shares have lagged the FTSE Gold Index by 12%. We believe this is a result of the market overreacting to the share-overhang risk related to Otkritie. We still regard gold as a safe haven, and anticipate that the price will average $1,350/oz in FY18 on global economic uncertainty stemming from North Korea tensions, US policies, and S&P bubble concerns. Polymetal trades at 5.5x EV/EBITDA when adjusted for Kyzyl – a 90%-completed growth project which should add 300koz to production – offering a 30% discount to peers. We reiterate our BUY rating on Polymetal, reducing our target price to GBp1,100/share on our stronger USD/RUB forecast of 58.
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