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KGHM targets a massive PLN 7BN EBITDA in 2021

TAG'S: KGHM, Metals Industry

Listed copper group KGHM eyes achieving PLN 7 bln in EBITDA in 2021 and expects its average annual EBITDA margin for years 2017-2020 to exceed 20%, the company said in a market filing on the 2017-2021 strategy.

 

EBITDA: 2021 EBITDA at PLN 7 bln, average EBITDA margin for years 2017-2021 above 20%.

 

CAPEX: Investment and capital spending both in Poland and abroad at PLN 15 bln to 2021.

 

SIERRA GORDA: Removing bottlenecks and increasing production to the annual average level of 70k tons of Cu attributable to KGHM in years 2017-2021.

 

DEBT: Maintaining net debt level below 2x EBITDA, with an eye on "optimal" net debt levels below 1x EBITDA.

 
 

ERSTE SECURITIES ANALYST TOMASZ DUDA

 

Complete lack of new information. The EBITDA target, from what we can see based on other factors from the strategy, depends entirely on [copper] price increases - if prices go up, the strategy will be delivered.

 

Annual investment outlays of the group are more or less at the level of this year's budget.

 

The company recommends a dividend offering a dividend yield of below 1%. As for a mining company, which usually offer high dividend yields to compensate the risk of commodity prices volatiliy, it is as if there were no dividend at all. The company just wants to show it pays a dividend.

 

Regarding the target of 70k tons of copper at Sierra Gorda - this and previous managements have been speaking about it since the launch of the project and it is not working out.

 
 

DM BOS BROKERAGE ANALYST LUKASZ PROKOPIUK

 

It's pretty hard to comment on this strategy without any knowledge of the main assumptions for markets and production volumes on which it was built. The PLN 7 bln EBITDA target can't be evaluated without knowing what it was built on.

 

It's disappointing that management didn't chose to share details on foreign assets, such as EBITDA targets for Sierra Gorda or other assets.

 

Per the PLN 15 bln CAPEX target, we had written PLN 17.5 bln into our models, so this slightly lower number is probably somewhere near the market expectation.

 
 
 

2017-05-12



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