Gemfields (LON:GEM) is well placed to meet the rising demand for coloured gemstones, especially from heavyweight Asian nations.
That’s the view of broker JPMorgan Cazenove, which kept its ‘overweight’ stance and 42p target price on the stock today.
The positive write-up comes after the company, which specialises in Zambian emeralds, raked in US$26.8 million at its Singapore rough emerald and beryl auction.
A total of 925,000 carats were offered and the majority, 902,000, were sold with 35 of the 37 companies in attendance placing bids.
The company achieved a price of US$29.71 per carat for the ethically stones output from its Kagem property in Zambia.
This was lower than the US$38.25 per carat achieved at its last Singapore auction, though the “mix and character” of the gems on offer this time around was “somewhat different”, it said.
JPMorgan analyst Alexander Mees reckons there is a chance that future auctions may include other types of gemstone, perhaps even rubies from Mozambique.
“We believe Gemfields’ current distribution channels have the potential to include a broader range of product,” the analyst said.
He added that the demand for coloured gemstones is intensifying, with Asian powerhouses, such as China and Japan, driving the trend.
“We believe Gemfields is well placed to meet this demand with consistent, high quality supply,” Mees concluded.
Shares climbed 3.9% to 41.55p today.