Page 197 - RusRPTApr23

International Financial Reporting Standards (IFRS), the company said in a statement on March 16.
BCS increased its TP for global gold producer Polyus — by 67% to Rb15,000/sh primarily on weaker ruble and higher gold prices assumptions. Polyus is a long-term bet on gold prices. We anticipate that a return to the dividends and the Sukhoi Log launch will be strong drivers for the name.
Bet on L-T stability persists. Polyus is a bet on long-term growth with the launch of the Sukhoi Log megaproject in 2028-29, which is expected to at least double the company’s EBITDA. Separately, the three new brownfield initiatives (two at Kuranakh and one at Natalka) announced recently may increase EBITDA by 20-25% by 2026-2027, we estimate. Near term dividend prospects would be clear within a couple of months with 8% of potential yield.
New projects launch. As BCS mentioned above, new projects developed by the company (especially, Sukhoi Log), are expected to increase the profits by 50-80% in 4-5 years.
Dividend payments resumption. BCS expect the miner would come back to the regular dividend payments on the back of business normalization and new sales channels. Potential yield is close to 8% for the 2H21-22, another 4-5% will be added by the end of 2023.
Higher gold demand in Russia on the VAT cancellation. The demand for bars & coins increased 10 times to 50 tons (15% of total production) last year. Perhaps this figure will be persisted in M-T due to the expansion of the gold sales infrastructure (from April 1, refineries and Goznak will also have the opportunity to sell gold).
Hawkish Fed policy may squeeze global demand for precious metals. Ongoing tight monetary policy by the Fed may pressure gold/silver prices in M-T, and it is yet unclear which steps would be approved later. Anyway, current gold rate coupled with the weak ruble allows gold miners to generate profit.
Weaker ruble, stronger gold rates result in higher profits. As an exporter, Polyus has strong exposure to FX rate, which depreciation coupled with the uptick in gold prices would lead to higher financials, as we estimate.
TP shined on optimistic macro factors. Our DCF-based TP for PLZL surged by 67% to Rb15,000/sh vs Rb9,000/sh earlier. As a result, the share has 60% upside potential and a BUY recommendation.
BCS keep Hold recommendation on gold and silver miner Polymetal, though substantially upgraded TP by 52% to RUB760/sh on weaker and higher gold prices. New projects, as well as dividend resumption, are anticipated to
197 RUSSIA Country Report Russia April 2023 www.intellinews.com