The biggest opportunity in the market right now? Try the maths below (reminder)…

1 mins. to read

And again “Mr Market” offers us a new buying opportunity at 359p…

We have been heavy buyers of KAZ this last 10 days. Our blog posts layout the story here.

It is noticeable that many brokers have been amending their bear stance from sells to hold and even from sells to buys in recent weeks on the stock too (Soc Gen, Credit Suisse, Liberum etc).. With the news over the weekend that two Russian banks are putting the final touches for the financing together to allow the 3 oligarchs to take ENRC private, taking a conservative exit level of 320p then, try as we might, we cannot square the math’s error below that “Mr Market” is offering us – 

ENRC stake value to KAZ = £1.07bn

ENRC Ekibastuz stake (worst case) – £1.2bn

KAZ Debt – £700m

Total value of these 2 stakes plus debt = £2.97bn

Current market cap = £2bn

Copper projected earnings  for 2013 (worst case) – £420m

“Rump” KAZ value just over 2 times copper assets EBITDA and which excludes all the other assets valued at upto £1.5bn by industry analysts.

If we don’t see over 400p this week then I’m a chocolate teapot. We think fair value is towards 700p.

Below are 2 charts of Kazakhmys relative to its 2 “visible” component value parts – the copper price and ENRC – as you can see the disconnect is of epic proportions and is a visual depiction of the argument laid out here.



The chart below looks resolutely bullish for Kazakhmys too going forward as it seems a clear basing formation and trend change is is process with copper – 

If anyone can square the share price disjoint for us – then send your answers on an email postcard to (the “vampire squid’s” “anal”-ysts need not reply!!!)

Comments (2)

Leave a Reply

Your email address will not be published. Required fields are marked *