Nornickel - Strong 2Q19 Production Results; Buy on Good Ni/Pd Price Outlook
Yesterday, Nornickel reported 2Q19 production results, which showed robust volumes across the board, and reiterated its full-year production guidance. We expect the 1H19 financials to be strong, with EBITDA rising 17% H-o-H to $3.7 bln. We project a dividend payout of $2.2 bln (6% yield), or 60% of EBITDA. Having slightly raised our commodity price forecasts, we increase our financial projections for Nornickel and nudge up our target price to $26.90 per GDR. We reiterate our BUY recommendation based on an expected total return of 30% over the next 12 months.MMC Norilsk Nickel PJSC is a global producer of nickel, palladium, platinum and copper. Co. also produces by-products, such as cobalt, chromium, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium and sulfur. Co. is involved in prospecting, exploration, extraction, refining and metallurgical processing of minerals, as well as in production, marketing and sale of base and precious metals. Co.'s production facilities are located in five countries: Russia, Australia, Botswana, Finland, and South Africa. Co.'s production units are integrated and include: the Polar Division (the Taimyr Peninsula); and the Kola Mining and Metallurgical Company (Kola MMC or the Kola Peninsula).
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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