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Norilsk Nickel (#GMKN) analysis

Norilsk Nickel (#GMKN) analysis

17 February 2021

PJSC Norilsk Nickel is a Russian mining and metallurgical company. At present, Norilsk Nickel unites a group of enterprises headed by the Public Joint Stock Company Mining and Metallurgical Company Norilsk Nickel. The company is the largest producer of nickel and platinum group metals (platinum, palladium) in Russia.

It should be noted that Norilsk Nickel has no competitors in the nickel mining sector. However, there are companies that compete with the company in the extraction of platinum group metals. The main ones are Polymetal and Stillwater Mining Company.

2020 Revenue: $ 15.5B (+ 15% YoY)

2020 EBITDA: $ 7.7B (-3% YoY)

2020 net income: $ 3.6B (-39% yoy)

Earnings per share last year: $ 21.4, down from the previous year $ 36.5

The fall in prices for produced raw materials during the coronavirus crisis triggered a drop in the company’s financial indicators for 2020.

Geographic distribution of revenue:

Europe – 44.51%

Asia – 35.85%

North and South America – 15.90%

Russian Federation – 3.74%

Despite a relatively difficult year, the company’s financial performance remains at a fairly high level. According to many analysts and the company’s management, at the moment Norilsk Nickel is the highest margin company in its segment. Despite this, the company has figured in several environmental charges. This is one of the risks for investors, since multibillion-dollar fines can significantly reduce the amount of dividends on the company’s shares.

Investors love the company for its raw material outlook and generous dividend policy. After all, the annual dividend yield on the company’s shares is usually double-digit. Moreover, nickel is currently one of the most promising metals. This is due to the fact that nickel is actively used in the production of electric vehicles.

Thus, despite the “outdated” business model, the company is very promising. After all, the main industry where the metals mined by the company will be used is at an early stage of development, so the demand for them will only gain momentum.

The situation at Norilsk Nickel is quite good. With a greater degree of probability, it will leave to correct along with the market, up to the levels of 22000. At this level, you can safely select to the best of your greed. The goals are higher.

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