Polymetal - Cost Inflation Rears its Head in 1H17 Results
Polymetal's 1H17 financial results indicated a return of cost inflation on the back of a strengthening ruble, which makes the company more vulnerable to any production hiccups or sales delays. That said, the ongoing production optimization should allow it to meet consensus expectations for 2017, assuming the gold price stays above $1,260/oz and the ruble does not strengthen much beyond 60 to the dollar until year end. As expected, Polymetal underperformed Polyus and its valuation premium over Polyus is almost gone. We think the underperformance still has some room to go as Polyus shares could be boosted by potential inclusion into the MSCI index and the launch of Natalka.Polymetal International is the ultimate parent entity of Polymetal Group, a precious metals mining group operating in Russia, Kazakhstan and Armenia. Co. has five reportable segments: Magadan; Ural; Khabarovsk; Kazakhstan; and Armenia. Each segment is engaged in gold, silver or copper mining and related activities, including exploration, extraction, processing and reclamation.
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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