WOOD Flash – Norilsk Nickel: production results – core production on track, but Chita guidance cut
Norilsk reported its 1Q18 trading update this morning (26 April). The company is on track and reiterated its guidance on Russian production from its core Russian operations for all metals, although the production of palladium and platinum will need to accelerate in future quarters to meet this guidance. However, it has cut guidance at the Chita project from 35-40kt of copper and 180-200koz of gold to 25-31kt of copper and 90-110koz of gold on a 100% basis. It only owns c.50% of Chita, so it is only losing an attributable c.5kt of copper and c.45koz of gold; therefore, the impact on Norilsk’s revenues should be small, in our view. As a result, we view this release as neutral for Norilsk, and believe that the direction of metals prices and the rouble (which have been extremely volatile in the past month) will have more bearing on the trajectory of the share price than these unsurprising production numbers. Uncertainty over the shareholder structure following the sanctions on 28% shareholder RUSAL also heightens the concerns around the stock; therefore, for now, we remain HOLDers of Norilsk (PT USD 20.2/GDR).
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.
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