Polymetal - Strong 3Q19 Production; Upside to 2019 Output Guidance Touted
Polymetal has reported strong 3Q19 production results and indicated that it could exceed its 2019 output guidance by up to 50 koz (in line with our forecast). The company noted additional cost pressures from higher royalties due to the increase in the gold price but left its 2019 cost guidance unchanged. Reported net debt indicated good FCF generation of around $90 mln in 3Q19. At the spot gold price and the current USD/RUB rate, the stock is trading at a 2020E EV/EBITDA of 7.4, a leveraged FCF yield of 6% and a dividend yield to be paid in 2020 of 5% (based only on regular dividends at a 50% payout from adjusted net income).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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