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UBS lowers ENRC target price after below-consensus interims

Published: 14:53 16 Aug 2012 BST

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Investment bank UBS has reduced its target price for Eurasian Natural Resources Corp (LON:ENRC) by 3 percent to 565 pence after  an interim results report that was slightly below consensus estimates.

The stock lost more than 10 percent from a level of just over 420 pence after the results statement yesterday, and by 2.45 pm today was trading down a further 1.87 percent at 372.50 pence.

The Kazakhstan-focused company reported a 19 percent drop in revenues from the previous first half to US$3,246 million, while pretax profit fell to US$667 million from US$1.667 billion a year earlier.

While it expects to produce at capacity in the second half, ENRC does not expect ferrochrome /iron ore prices to recover before the end of the current year.

UBS analyst Myles Allsop noted that the group is still considering its options to unlock value from its portfolio. He expects projects of a total capex value of US$5 billion to be deferred, and international assets to be demerged.

He reiterated his ‘buy’ rating for the group.

Allsop believes the share price reaction was overdone, and that a restructuring is likely this year.

 

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