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%.

NCM

Gold

 

 

 

Newcrest Firms In Front Of Tomorrow’s Sales Data

Since posting an intraday low of $18.60 on September 6th, shares of NCM have risen over 10% and reached a 2-month high of $20.75 in early trade today.

A combination of firm Gold prices and investors’ interest in holding shares in hard assets has been bullish for the stock.

NCM will release its quarterly sales and revenue numbers tomorrow.

Recall that NCM shares rallied to $21.95 after the release of their Q4 production numbers showed a 15% increase in production to just under 635,000 ounces.

NCM was added to our ASX Top 50 portfolio in July at $20.05.

We suggest adding to long positions in NCM with an initial target of $21.50 followed by $22.40 over the medium-term.

Newcrest Mining

 

 

 

Buy And Hold Local Gold Shares

Last week’s extreme volatility in global equity markets has been a net positive for the local gold mining names.

After trading as low as $1060.00 in mid-August, Spot Gold reached a 2-month high at $1226.00 last Thursday.

As illustrated on the chart below, the yellow metal is still down more than 10% over the last 6-months.

However, with last week’s change in the overall risk dynamic of equities, investors may increase their holdings in Gold as a hedge against market uncertainty.

Combined with a weaker Aussie Dollar, we see stable gold prices lifting the shares of the local miners.

Our preferred names in the Gold sector are: NCM, SBM, SAR and EVN.

Spot Gold

Newcrest Mining

Santa Barbara

Saracen

Evolution Mining

ALGO Update: Stay Long Newcrest Mining

Since dropping to a 10-month low last week at $18.75, shares of  Newcrest have lifted over 4% as the price of gold has stabilized.

It’s worth noting that NCM posted a 2% increase in revenue and a 16% rise in underlying profit in their FY18 results last month.

NCM is still under an ALGO buy signal and was added to our ASX Top 100 portfolio on July 19th at $20.05.

We still prefer the long side of NCM and see initial resistance in the $22.35 area over the medium-term.

Newcrest

 

 

Gold Finds Technical Support As Fundamental Risks Increase

After reaching a high of $1370.00 in mid-April, the price of gold dropped over $200.00 and traded as low as $1160.00 on August 16th.

By many technical measures, the 4-month correction in the yellow metal looks to have run its course.

Increased trade tensions, EM currency weakness and Geo-political risks are all fundamental elements which support higher prices for Gold.

The next point of resistance is near $1214.00, with solid support at $1185.00

Our preference within the gold miners is NCM, followed by EVN.

 

ALGO Update: NCM & EVN

NCM reported a strong earnings result and forward guidance will be supported by higher revenue and lower costs.

Gearing is now at 12% and with gold prices likely to rally from the current oversold levels, we see scope for NCM and EVN to find buying support in the near-term.

Both stocks have gone ex-dividend today and paid 15 cents and 4 cents, respectively.