Polyus/Polymetal: Russian gold majors – a good bet in high σ times (BUYs - initiation of coverage)
We initiate coverage of Polyus and Polymetal with BUY recommendations and price targets (PT) of USD 93.5/GDR and GBP 15.4/share, respectively. Polyus should be a core long-term holding for investors willing to get exposure to the gold sector and as a hedge against inflation, in our view. The addition of Sukhoi Log in 2027E, which should add 80%+ to its gold output vs. its current capacity, should serve as a material rerating trigger in the long term, in our view. In the medium term, the name has fallen below its fair value, in our view, even factoring only part of Sukhoi Log into our valuation. Separately, Polymetal is trading at unjustified low levels currently. Even assuming stable gold prices, Polymetal could yield 9.5% this year, on our estimates, which is a significant feat vs. most of the other majors, which offer around 2-3%. Although there are some risk of increases in its capex guidance in the future, we believe that this is limited for the next couple of years.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.
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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