reports
- Alison Turner
Gemfields Group - Termination of coverage
Edison Investment Research is terminating coverage on Riber (ALRIB), Gemfields Group (GEM), Securities Trust of Scotland PLC (STS), Gresham House Strategic (GHS), La Doria (LD) and Studio Retail Group (STU). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.
Gemfields Group (GML): Coloured gemstones' time to sparkle and shine
Edison Investment Research Limited Gemfields Group (GML): Coloured gemstones' time to sparkle and shine 17-Dec-2021 / 08:10 GMT/BST London, UK, 17 December 2021 Gemfields Group (GML): Coloured gemstones' time to sparkle and shine Record Q4 emerald and ruby auctions, which generated US$37.8m and US$88.4m respectively, took Gemfields' total gemstone auction sales for 2021 to US$239.6m, an all-time high that exceeds the 2019 total of US$200.6m. The results indicate a strong market for coloured gemstones. Gemfields provides investors with unique exposure to this subsector and we...
- Alison Turner
Gemfields Group - Coloured gemstones’ time to sparkle and shine
Record Q4 emerald and ruby auctions, which generated US$37.8m and US$88.4m respectively, took Gemfields’ total gemstone auction sales for 2021 to US$239.6m, an all-time high that exceeds the 2019 total of US$200.6m. The results indicate a strong market for coloured gemstones. Gemfields provides investors with unique exposure to this subsector and we have updated our forecasts to reflect stronger gemstone prices.
- Alison Turner
Gemfields Group - Coloured gemstones’ time to sparkle and shine
Record Q4 emerald and ruby auctions, which generated US$37.8m and US$88.4m respectively, took Gemfields’ total gemstone auction sales for 2021 to US$239.6m, an all-time high that exceeds the 2019 total of US$200.6m. The results indicate a strong market for coloured gemstones. Gemfields provides investors with unique exposure to this subsector and we have updated our forecasts to reflect stronger gemstone prices.
- Alison Turner
Gemfields Group - A new strategic shareholder
We believe the phased purchase of a 26.17% stake in Gemfields by mining holding company Assore International Holdings should be regarded as a vote of confidence in Gemfields’ value proposition. Despite recent share price appreciation, the current price remains more than 30% below our DCF sum-of-the-parts valuation of ZAR4.69/share. Strong results, including US$23.1m at the July/August commercial quality emerald auction, reflect a strong coloured gemstone market. H1 results saw EBITDA of US$43.5m...
- Alison Turner
Gemfields Group - A new strategic shareholder
We believe the phased purchase of a 26.17% stake in Gemfields by mining holding company Assore International Holdings should be regarded as a vote of confidence in Gemfields’ value proposition. Despite recent share price appreciation, the current price remains more than 30% below our DCF sum-of-the-parts valuation of ZAR4.69/share. Strong results, including US$23.1m at the July/August commercial quality emerald auction, reflect a strong coloured gemstone market. H1 results saw EBITDA of US$43.5m...
- Alison Turner
Gemfields Group - Maxi-mini auction results
As travel restrictions prevented customers travelling to auctions, Gemfields turned to a series of mini-auctions to sell rough rubies and emeralds. These generated US$58.9m from ruby sales and US$31.4m from emeralds this year making the ‘mini’ in mini-auctions appear misplaced. Not only does the US$90.3m in sales shore up the balance sheet, but the prices achieved point to strong customer demand for Gemfields’ stones.
- Alison Turner
Gemfields Group - Marching towards March 2021 auctions
Although Gemfields has been unable to hold full gemstone auctions since February, successful November and December emerald mini-auctions generated US$10.8m in sales. Full in-person auctions are planned for March 2021 if travel restrictions lift by then. Gemfields has taken steps to preserve cash, including keeping both mines suspended, and we now forecast end 2020 net debt of US$11.6m (from US$10.5m previously).
- Alison Turner
Gemfields Group - Cash preservation ahead of December auctions
Gemfields has provided an update on the impact of COVID-19 on its business. Mining remains suspended at both MRM and Kagem and will not resume before the end of September and October, respectively. The company hopes to hold its first auctions since February in December, but that remains subject to uncertainty given travel restrictions. Gemfields ended June with cash of US$53.6m and net cash of US$9.3m, which, together with cost-cutting measures, positions it well to continue to weather the storm...
- Alison Turner
Gemfields Group - Still good value under varied COVID-19 scenarios
Considering the uncertainty surrounding COVID-19 (and Gemfields’ inability to hold emerald and ruby auctions while international travel is severely restricted), we have considered three COVID-19 scenarios in terms of recovery timing. In both our faster recovery and central case scenarios, Gemfields remains EBITDA positive in 2020 and ends the year in a net cash position.
- Alison Turner
Gemfields Group - A Valentine’s Day gift for the AIM market
Fittingly for a coloured gemstone company, Gemfields began trading on London’s AIM market on 14 February. We continue to see significant value in this stock, which was previously under the radar, and our updated sum-of-the-parts valuation is US$522m (previously US$449m). The removal of the 15% export duty on Zambian emeralds has a significant positive impact on Kagem, which we now value at US$246m (previously US$153m). We expect Gemfields to generate US$75m in EBITDA in 2020 (previously US$59m...
- Alison Turner
Gemfields Group - Strong November emerald auction
Gemfields’ November high-quality emerald auction sale of US$27.2m reflects strong demand for Kagem’s emeralds and, more broadly, points to continued strength in the coloured gemstone market. Completion of the buyback of 143m shares is the key driver of an increase in our sum-of-the-parts valuation to ZAR5.65 per share (from R5.27/share previously).
- Alison Turner
Gemfields Group - Coloured gemstones outperforming diamonds
All signs point to continued strength in the market for coloured gemstones, which is in contrast to the weak diamond market conditions. Against this backdrop, Gemfields delivered solid half-year results with EBITDA of US$33.1m (up 3% year-on-year). The company ended June with net cash of US$35.5m, up from US$9.8m in December, driven by the partial sale of its stake in Jupiter, as well as free cash flow from operations.
- Alison Turner
Gemfields Group - Jupiter sale funds buyback and special dividend
Our updated sum-of-the-parts (SOTP) valuation of Gemfields is ZAR4.91 per share before taking into account the planned buyback of up to 10% of the issued share capital. If the buyback was fully executed at the current share price of ZAR1.65/share, the SOTP would increase to ZAR5.31/share. Gemfields’ agreed sale of its stake in Jupiter for A$44.24m (US$30.5m) funds a planned return of capital to shareholders totalling US$24.68m, split between the share buyback and a subsequent special dividend....
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