Norilsk Nickel: Chips crisis + lower payouts = limited return (HOLD - re-initiation of coverage)
We re-initiate coverage of Norilsk Nickel with a HOLD recommendation and a price target (PT) of USD 34.3/GDR. The company’s metals basket should show a balanced performance – copper and PGM prices could be under pressure in 2022E, while nickel should stay strong, resulting in relatively flat financial metrics for Norilsk yoy. At the same time, negotiations on the new shareholder agreement between the two key parties in the name, Interros and Rusal, could be a factor of short-term volatility. We believe that a new dividend policy, with an 80% FCF payout, is the most likely outcome of the negotiations, which could push Norilsk Nickel’s dividend yield into sub double-digit territory in 2023E, on the back of the company’s elevated capital expenditure in 2022-25E. Such a development, paired with its limited financial performance, could be a factor limiting the company’s share price growth, in our view.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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