Equity Analysis /

Russian Gold. In gold we trust.

    Radmir Fattakhov
    Radmir Fattakhov

    Analyst, Metals & Mining

    Yulia Tolstykh
    Boris Krasnozhenov
    5 September 2019
    Published by
    We initiate coverage of the Russian gold sector (Polyus and Polymetal) with Overweight recommendations. We assign Overweight (O/W) ratings to Polyus, with a target price (TP) of $66.5/GDR (16% upside) and Polymetal, with a TP of GBP14.3/share (18% upside). The fair valuation in our report is based on a combination of DCF and one year forward EV/EBITDA and P/E multiples. We assign an equal weight of 1/3 to the DCFbased valuation, 2020E EV/EBITDA and 2020E P/E. 12.0x EV/EBITDA 2020E and 7.0x P/E 2020E multiples are applied. Ranked among the top-10 largest global gold producers, the Russian gold majors demonstrate solid growth profiles, strong balance sheets, high total shareholder returns, cost leadership and high ESG rankings.