Kazatomprom: digging the margins (stays BUY)
We maintain our BUY rating on Kazatomprom (KAP), with an updated price target (PT) of USD 61.6 (from USD 41.8), offering upside of 54.0%. Uranium prices have surged to over USD 100/lb in 1Q24 and we expect spot prices to average USD 90/lb in 2024E and next year. We do not see supply coming onstream quickly enough to seriously dent prices. We expect KAP’s production levels to remain flat for the next couple of years, due to sulphuric acid supply constraints, which will only be fully resolved by an investment which is due for completion in 2026E. We also need to wait until then for the volumes from Budenovskoye to make a difference. Although inflation has increased costs, we expect KAP to remain cash rich, generating high FCF. Investments in enrichment and nuclear power may be on the cards, but we expect double-digit dividend yields from 2024E-onwards. We see Kazatomprom trading at 4.9x P/E for 2024E and 4.7x for 2026E, currently, on our forecasts.
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.
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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.
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