Polymetal - Kyzyl Exceeding Expectations; Stock Fairly Priced at Current Levels
Polymetal hosted a visit to its Kyzyl project on October 18-19. The asset has been ramped up to full capacity ahead of schedule, and its strong performance suggests upside to Polymetal's full-year 2019 output guidance. Assuming an average gold price next year of $1,300/oz, we raise our 2019 EBITDA forecast to $990 mln and our LFCF projection to $400 mln. Polymetal trades at a 2018E EV/EBITDA of 7.6 and 2019E EV/EBITDA of 5.7, with a 2019E LFCF yield of 9%, which we see as justified given where Polyus and global peers are trading. We increase our target price from $9.64 to $10.60 per share and reiterate our HOLD recommendation.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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