GDX – Gold ETF

The below post is a copy of a publication on the 18th of October. Since making the post, gold stocks have performed well and we now look to trim the gains and rotate into oversold industrial & REIT names.

Vaneck Vectors Gold Miners  is under Algo Engine buy conditions following the entry condition earlier this year at $30. It is a current holding in our ALL ASX ETF model portfolio.

GDX ETF has corrected from $45 to $38 over the past 8 weeks. We feel buying support will now begin to increase.

Individual names are also now appearing on the radar, such as Newcrest Mining Northern Star Resources, Evolution Mining, OceanaGold and Gold Road Resources.


NCM – Valuation Review

Newcrest Mining is under Algo Engine sell conditions. Our preferred gold names have been EVN and NST, which remain in our ASX 100 model portfolio.

Whilst there’s upside risk to NCM, if the gold price continues
higher, we remain cautious following the latest earnings update.

FY19 EBITDA of US$1,670m was close to market consensus and FY20 production guidance is similar to FY19, with 2.35-2.5 million ounces.

Our base case is FY20 earnings are unlikely to top FY19 and with the stock trading on an FY20 forward dividend yield of 1.6%, we see better opportunities elsewhere.

We’ll continue to monitor NCM and will review further following the next Algo Engine buy signal.







Newcrest 1H19 Result

Newcrest is under Algo Engine sell conditions. Our preference is for Northern Star and OceanaGold.

NCM 1H FY19 NPAT beat consensus, with profit coming in at US$237m. EBITDA of US$739m also beat consensus, supported by lower operational costs.

NCM declared a US 7.5cps fully franked dividend, which flat on the same time last year.

We consider NCM expensive relative to peers.


Newcrest Mining – Gold Update

A strong result for NCM in Dec Q18, driven by out performance at
Cadia, (Cadia Valley NSW is one of Australia’s largest gold mining operations).  

Cadia set a record for both quarterly and half year gold production.

Gold production guidance for FY19 is unchanged at 2.5mn ounces.  This is around prior high levels of production reached a few years back.

The gold sector has been a hot spot for recent merger and acquisitions. The market is waiting to see if Newcrest makes a move. 

In FY 19 revenue will increase 10% and EBIT should increase to US$965mn.  The stock trades on a forward yield of 1.5%.