Polyus - Trading Update Strong, TP Raised on Positive Gold Outlook
Polyus published a good 2Q19 trading update that was generally in line with our expectations. We anticipate a strong set of 2Q19 financial results, with EBITDA rising 22% Q-o-Q to $595 mln. Leveraged FCF should be slightly down Q-o-Q at $185 mln (for a 1.3% yield), as it might be pressured by higher capex and a working capital buildup. We have incorporated an updated $1,400/oz gold price forecast for 2020 into our model and run a scenario-based valuation with a gold price of $1,500/oz in the bull case. We raise our target price 5% to $59.00 per GDR and reiterate our BUY recommendation.
PJSC Polyus is an open joint stock company based in Russia. Co. is engaged in operations as a gold production company. Co.'s major assets are: in Krasnoyarsk region, Olympiada deposit as well as Blagodantoe, Titimukhta, Tyrada, Olenii, Razdolinskaya, Zyryanovskaya and Panimba fields; in Irkutsk region, Zapadnoe, Verninskoe, Pervenets, and Chertovo Koryto and Mukodek goldfields as well as some 94 placer deposits; in Magadan region, Natalka deposit and smaller Degdekan and Vostochnoye fields; in the Republic of Sakha (Yakutia), Kuranakh ore body and Kyutchus field as well as 50% interest in the giant Nezhdaninskoye field; and in Amur region, Bamskoe gold field.CJSC Deloitte & Touche CIS
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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