Buy Signal on KAZ Mineral (KAZ-GB)
Kaz Mineral is a £2.8Bn market cap copper company. The Company operates in the natural resources sector mainly in Kazakhstan and Kyrgyztan.The segments of the eastern region, Bozshakol and Aktogay are engaged in the mining and processing of copper and other metals in Kazakhstan. The Bozymchak segment is engaged in the mining and processing of copper and gold in Kyrgyzstan. The Mining Projects segment is engaged in the development of metal deposits and processing facilities in Kazakhstan. The East segment includes the Vostoktsvetmet LLC (VCM) entity, primarily engaged in the mining and processing of copper and other metals, which are produced as by-products from four underground mines and three concentrators located in the Eastern region of Kazakhstan.
The company benefits from higher copper prices that are on a two years high. The net result is expected to be close to £500m in 2020 (versus £570m in 2019) and to rebound sharply in 2021. The main issue remains the high leverage (Net debt at £2.8 Bn), therefore the cash-flow generation is key.
Short term catalyst: Copper prices, deleveraging.
This signal looks consistent with the bullish momentum in European basic materials.