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Polyus: 1Q21 IFRS results in line with consensus – NEUTRAL

  • Polyus (PLZL.LI; O/W; $115.6/GDR) issued 1Q21 IFRS financials today
  • The company demonstrated stringent cost management as 1Q21 TCC came below the 2021 guidance
  • The FCF surged 64% y/y to $423mn on flattish capex dynamics, holding at $127 mn

Polyus (PLZL.LI; O/W; $115.6/GDR) issued 1Q21 IFRS financials today. The numbers came broadly in line with the consensus on the revenue and adj. EBITDA lines. The news is neutral for the stock, in our view. The company demonstrated stringent cost management as 1Q21 TCC came below the 2021 guidance. In the meantime, we see gold prices breaking above $1,900/oz fuelled by mounting inflation expectations and US dollar weakness.

The total revenue increased 18% y/y to $1,028mn on the higher realized gold price (12% y/y) and improved gold sales volumes (5% y/y). 1Q21 adj. EBITDA amounted to $739mn (25% y/y, down 35% q/q) translating into a 72% EBITDA margin. The sequential drop comes on the back of lower refined gold production volumes at Olimpiada (down 10%), Blagodatnoye (21%), Natalka (13%) and seasonal disruption at Alluvials, coupled with a lack of flotation concentrate sales which are anticipated in 2Q21. In view of the foregoing, 1Q21 TCC climbed only 9% q/q to $386/oz, which sits lower than the company’s initial guidance of $425-450/oz in 2021. Nevertheless, the company anticipates a gradual increase in TCC from 2020 levels driven by inflation lower grades at Olimpiada.

The company’s balance sheet remains strong with the 1Q21 net debt/adj. EBITDA ratio at 0.5x as compared to year-end 0.7x, reflecting solid quarterly cash generation. The FCF surged 64% y/y to $423mn on flattish capex dynamics, holding at $127 mn. Nevertheless, management reiterated its former capex guidance of $1.0-1.1bn for 2021, despite sequential drawdown. To remind, 4Q20 capex stood at $272mn, accounting to 42% of the annual investments. The company keeps up with progress on further brownfield development, including the recently approved Mill-5 construction. The Sukhoi Log feasibility study is in progress and should be completed in 2022.

Among other highlights, Covid-19 related expenses came in at $35mn in 1Q21, excluded from the adjusted EBITDA calculation.

Later today, we expect the AGM to approve 2H20 dividend, recommended by the BoD at $2.54/GDR, which implies 2.3% div. yield in current prices (as of May 26 close).


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The contents of this document have been prepared by Joint Stock Company “Alfa-Bank” ("Alfa Bank") as Investment Research within the meaning of Article 36 of Commission Delegated Regulation (EU) 2017/5...

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