英文投资研究报告经典范文-2013CFA Research Challenge比赛获奖报告

CFAInstituteResearchChallengehostedbyLocalChallengeCFASocietyofPolandWroclawUniversityofEconomicsWroclawUniversityofEconomicsStudentResearchImportantdisclosuresappearatthebackofthisreportThisreportispublishedforeducationalpurposesonlybystudentscompetinginTheCFAInstituteResearchChallenge.[MiningIndustry,BasicMaterialsSector]KGHMPolskaMiedźSADate:15/02/2013Ticker:KGH:PW(Bloomberg)Exchange:Recommendation:BUYTargetPrice:PLN220(USD70.5)CurrentPrice:PLN185.5USD/PLN:3.12HighlightsKGHM-Copper-bottomedinvestment•WeissueabuyrecommendationwithatargetpriceofPLN220(USD70.5).Itimplies27%holdingperiodreturn(includingdividend).KGHMisoneofthebiggestandmostliquidblue-chipsonWSE(averagedailyvolumeaspercentofsharesoutstanding:0.53%),effectivelyexpandingintointernationalmarkets.Currentpositionmaybedescribedbythe9thplaceinminedcopperproductionandthe1stplaceinsilverproductionglobally.TheCompanyisatypicaldividend-payingfirm,withhistoricalmediandividendyieldinyears2008-2012amountingto10.76%•Mainpricegrowthdrivers:(1)Robustpipelineofinternationalprojectsresultingin58%growthofproductionvolumeby2017;(2)Highdiscounttopeers(52%withrespecttoP/E2012E,32%withrespecttoEV/EBITDA2012E)expectedtofallsubstantially.Themainreasonsfordiscountdecreasearegeographicalandmineralbasediversification,aswellassignificantlyhighergrowthopportunitiescomparingtopast;(3)IncreasingoperationalefficiencybyGroupaverageC11costreductionby20%till2018.•Soundfinancialposition:lowleverage,cashsufficiencyandhighmargins.WeestimateKGHMtostillexhibithealthyfinancialstanding,despitehighforecastoutlaysforprojectsandhighdividendpayout:(1)D/Aequalto5.45%in2012Eand11.38%in2017E;(2)CFO/CAPEX;in2012Etobe141%,in2017Etobe383%(3);EBITDAmarginamountingto35%in2012Eand45%in2017E.•Mainrisksissuesare:adversefluctuationsincopperandsilvermarkets,aswellasinUSD/PLNexchangerate.Macroconditions,industrydemandandsupplyassumptionsalsohavesignificantinfluence.Moreover,failuresofnewprojectsandStateTreasuryinfluencemayposeadditionalrisk.KGHMdailystockprices(PLN)1Thecostsofmining,millingandconcentrating,onsiteadministrationandgeneralexpenses,propertyandproductionroyaltiesnotrelatedtorevenuesorprofits,metalconcentratetreatmentcharges,andfreightandmarketingcostslessthenetvalueoftheby-productcredits.80100120140160180200220240ClosingpriceTargetPriceCurrentPricePLN220PLN185.518.62%upsideChangeinforecastlevelofUSD/PLNrateinyears2013-2017Changeinforecastlevelofcopperpriceinyears2013-2017-10%-5%0%5%10%-10%212221229236243-5%2222302392462530%2312402482562635%24024925726527210%249257265273280HoldingPeriodReturnEndof2013Endof2014Endof201527%39%55%Source:TeamestimatesMarketprofile52-weekpricerange(PLN)111.4–194.5Averagedailyvolume1059368As%ofsharesoutstanding0.53%Sharperatio(2012)3.772012dividendyield24.2%Sharesoutstanding200000000MarketCapitalization(PLNbn)37.76InstitutionalHoldings62%BVpershare(PLN)109.7ROE2012E22%Debttocapital2012E5.43%P/BV1.68P/E7.5Source:Teamestimates,BloombergValuationDCFMultipliersEstimatedprice248192Weights50%50%Targetprice220Source:TeamestimatesSource:stooq.pl,TeamestimatesSource:Teamestimates,basedonDCFpriceCFAInstituteResearchChallenge15Feb20132BusinessDescriptionKGHMPolskaMiedźS.A.isaPolishminingcompany,whichspecializesincopperextractionandsmeltering.Establishedin1951,locatedinLubin,LowerSilesia,KGHMPolskaMiedźS.A.isoneofthebiggestplayersonglobalcopperproducersmarket.AfteracquisitionofCanadianQuadraFNX(nowKGHMInternational)theCompanyisaholderof#4thlargestcopperreservebaseintheworld.TheCompanyis9thbiggestcoppermineproducergloballyand#1silverproducer.WeidentifythebiggeststrengthoftheCompanytobethequalityofitsproducts(‘fournines’–99.99%ofcopperintheirproducts),greatbaseofknow-how,sustainablefinancialstandingandownresourcebase(aswellassmelters–backwardintegrationofproductionprocess).TheCompanyiscurrentlyengagedinintensiveexplorationprojectswhichassureprospectsforfurtherstrengtheningofKGHM’sinternationalposition(pleaseseeappendix10regardingglobalminesportfolio).In2011theCompanywashiringover18kworkers,whereas12kwhereminers.Asaholding,KGHMcomprises50subsidiaries.However,thecorebusiness(dedicatedto87%oftheGrouprevenuesand103%ofNIinyear2011)wasrunthroughonecompany,KGHMPolskaMiedźS.A.untiltheacquisitionofQuadraFNX.Salesofcopperconstitutes76%oftotalsalesoftheCompany.Theproductisusedmainlyinelectricandelectronicgoodsindustryaswellasconstructionindustry.Additionallyitmaybeusedintransport,householdapplianceandindustrialequipment.KGHMofferscopperproductsinformsofcathodes,wirerodsandbillets,whilewirerodsandcathodesbeingmostimportant.Businessmodelisbasedonlong-term,oftenoptionalcontracts(optionalitydependsontheamountoftonnage)forcopperdelivery,aswellasthesalesthroughLME.Currentlybindingcontractsforcoppersaleweresignedwiththefollowingcustomers:PrysmianMetalsLimited(sizeofthecontractPLN2.38–2.86bn),MKMMansfelderKupferMessingGmbH(PLN1.5bn),nktcablesGmbhCologne(PLN4–4.4bn)andChinaMinmetalsCorporation(PLN6.3–12.6bn).Formoreinformationpleaseseetheappendix15.Productforeignrecipients.Inyear2011thedomesticsale