UBS has cut its target price for mining group Eurasian Natural Resources Corp (ENRC) from 585p to 565p after first-quarter figures came in below expectations.
ENRC's earnings per share (EPS) came in at 36 cents, down 42% half-on-half and 6% below consensus. Meanwhile, net debt was sharply higher, up $2.4bn at $3.4bn due to acquisitions and capital expenditure (capex).
UBS has reduced its 2012 and 2013 EPS estimates by 4% and 7%, respectively, mainly on the back of a higher tax rate (which moderates from 2014 onwards).
Nevertheless, the broker has maintained its 'buy' recommendation on the stock, highlighting the board's options to best unlock value.
"Management is reviewing all capex projects not in execution ($8.8bn of $11bn projects); we expect c$5bn to be deferred and Frontier/Kolwezi in the DRC (capex c$475m) prioritised.
"The board evaluates demerging international assets; we believe this has the potential to crystallise value if ENRC finds a JV partner for BMSA/ strong management team, and gives core Kazakh business a credible strategy," the broker said.
By 11:02 on Thursday, shares were down 0.82% at 376.5p.
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