In an August 2 research note, BMO Capital Markets analyst Alexander Pearce reported that Kazatomprom (KAP: LSE) "delivered a better than expected Q2/21 overall."
Specifically, Pearce indicated, the uranium major's production and sales both were a beat in Q2/21. He addressed both.
As for attributable Q2/21 production, it was 8,000,000 pounds (8 Mlb), 8% higher than BMO's estimate and 10% higher than Q1/21 production. Overall production totaled 14.4 Mlb, exceeding BMO's forecasted 12.9 Mlb.
"Production continued to improve after the impact of lower wellfield activity mid-last year," Pearce wrote.
Regarding Q2/21 group sales, they amounted to 12.9 Mlb U3O8, 71% higher than BMO's projection of 7.5 Mlb U3O8. Pearce pointed out, however, that such variability is typical, as "the timing of customer deliveries can vary significantly quarter to quarter and are generally weighted to H2." He added that deliveries will likely balance out during the rest of 2021.
Pearce mentioned the one negative in Kazatomprom's Q2/21 results, which is its average realized uranium price. It was US$29.60 per pound, 6% below BMO's forecast.
The analyst presented Kazatomprom's reiterated guidance and BMO's expectations, both for full-year 2021. Production guidance is 32.6-33.3 Mlb U3O8; BMO's estimate is just below the lower end of that range, at 32.5 Mlb U3O8. All-in sustaining cost guidance is US$12-13 per pound; BMO's estimate of US$12.24 per pound falls within that. Group sales guidance is 40.3-40.6 Mlb; BMO's expectation is slightly higher at 40.9 Mlb U3O8.
BMO has an Outperform rating and a CA$33 per share target price on Kazatomprom, its top pick in the uranium space. Kazatomprom's stock closed today at CA$25.30 per share.
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Disclosures from BMO, Kazatomprom, Aug. 2, 2021
Analyst's Certification: I, Alexander Pearce, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness ingenerating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
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