We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Many thanks John as ever: all those wishes hardly sound unreasonable or far-fetched. I hope you will have the time for post-meeting thoughts too.
(Ps I don't know too much about shareboard etiquette but by way of thanks, a look at Hemogenyx's board - especially the posts of your equivalent over there JustHereForHemo - could be worth it as there is a reasonable possibility of good news there within the next 1-8 working days.)
@Moorscloud.....in response to your comment, first and foremost would be to hear Mr Nesis say its business as usual as far as he is concerned, that he is still in control and committed to the job as long as shareholders want him, despite his brother (Judas) selling up. Nesis understands the business, understands Russia and the region better than anyone else and so is pivotal to the success of POLY navigating the current situation and re-establishing itself on growth path once again.
I am of the opinion that there’s been no progress on the sale of Russian business and that is why his brother Alexander sold out. Think about it, why would you want to sell out so low IF realising ‘value’ from Russia assets was around the corner? If the news we get is to the contrary, then that would make my day.
Bytheway, I have already submitted questions including one on your behalf asking…What is proving more difficult in exiting Russia; is it finding of a buyer willing to pay a fair price or negotiating fair settlement with Russian authorities on the proceeds?
Moving onto figures, I’m looking for a very positive trading update with production increasing by 10% year on year, EBITDA at around $1.5bn and Net Profits at around $1bn; assuming inventory has been wound down to normal levels of course from high figure as at end 2022. I think this would put a solid floor under the sp going forward and set it on upward trend once again.
Divi is impossible without divesting away from Russia, so I would like to hear the huge cash flow arising in Russia been used to pay down costly debt. Given healthy trading in Russia, I’m looking for debt to fall to quite a bit below $2bn at year end as compared to over $2.5bn at ye 2022.
Like many POLY holders, I’ve been shaken a bit since news of Alex Nesis selling out yesterday and resultant impact on sp, so will be looking for reassurance.
I’m out all day tomorrow and so will hope recording is available after the event.
Fingers xd………….
Bit obsessed with what's going on over at Hemo and He1 at the moment but very much looking to your thoughts John after tomorrow's meeting. It doesn't sound as though you're expecting that much news on the sale; what would you like to hear may I ask?
Yes...I didn't know 2 were different people. I hope Vitaly Nesis does hang around cos he has done a magnificent job.
Major shareholder Nesis was Alexander Nesis, whereas Polymetal Group CEO is Vitaly Nesis.
@RGP007...if that is the case, then I admit my mistake... APOLOGY.
I hope all works out for us all.
You appear to be confusing Nesis the CEO with Nesis the now former investor. They are brothers. Nesis the CEO has never been a "major investor"
I think its only matter of time before Nesis is replaced; and he has to be replaced as he is no longer a major investor. Not taking anything away from Nesis cos he has done a fantastic job to date saving the company.
IMO it is the prospect of sanctions closing in on him and hence forever be labelled Putin's enabler which led to his decision to divest and only matter of time before he steps away completely. This will also be better for POLY as they will soon be led by someone who is not watching over their shoulder all the while in fear of sanctions.
Not sure how the sale of Russian assets is progressing, but I fear not too well. IMO there's no shortage of buyers but think Russia penalty may be too high a price to pay to do a deal. This means POLY could be in Russia for a long term until conflict ends during which there will be no divis but shareholder value will continue to accumulate since the business is highly profitable and will remain so in the near future.
In the meantime, sp on AIX falls for second day running whilst it remains steady on MOEX. It all makes for an interesting meeting tomorrow, and let's hope it works out best for all.
Fingers xd.........
Just picked up news on sale of assets owned by Nesis to Maaden International Investment llc. I’m not sure what to make of this transaction at this stage of POLY reorganisation other than to assume Nesis may have been forced to offload holdings and thereby avoid being a victim to potential forthcoming sanctions on entities and individuals based in Cyprus.
Powerboom Investments Ltd (which holds shares in POLY) is registered in Cyprus and is a wholly owned subsidiary of ICT Holdings Ltd which is registered in Russia. Nesis is also a resident of Cyprus.
The authorities in Cyprus have recently said they will come down hard on anything Russian using the country to ‘evade’ sanctions and called in FBI to help.
FBI to help Cypriot police investigate sanction-busting for Russian oligarchs | Cyprus | The Guardian
I was of the opinion POLY was trying to exit Russia with reasonable value, so news of Nesis coming out with ‘value’ and us still invested in Russia is a bit of a shock. I think Nesis did say recently that his holdings were wholly listed on MOEX which is worth $1 more than sp on AIX; MOEX listing so far today is trading positively and so have taken the news in its stride.
POLY have not provided terms if any of the sale agreement, or value of the transaction but one can assume it is at least in line with valuation on MOEX which is about $5.60 per share.
I am unable to trace any info on Maaden International Investment llc based in Oman; however there is Ma’aden Mining company based in Saudi Arabia.
There will be a lot to clear up and answer for in the forthcoming POLY conference on the 31st. I am not registered with Telegram and hence it would be good to know any further information available.
Many thanks for the detailed reply John.
1)
1)
See p7 of https://www.polymetalinternational.com/files/en/2023_05_10_Analyst_and_Investor_Briefing_transcript.pdf
"In terms of taxation, specifically the company's taxation and not so much about the
shareholders taxation - the company after the re-domiciliation will be subject to the
Kazakh tax regime, although AIFC offers significant tax benefits versus the general tax
code for Kazakhstan registered companies and specifically, as Vitaly has mentioned, the
dividends will be exempt from the taxation in Kazakhstan."
2)
See https://aix.kz/equity-income-tax/ , this echos the above and also refers POLY specifically.
...what could go wrong.
https://www.thetimes.co.uk/article/the-struggle-to-save-the-minds-of-traumatised-troops-before-sending-them-back-out-2j73g2z5w
Poly SP $4.94 and this is with all the uncertainties around it.
A sale and a special dividend takes polymetal to $10 minimum in my opinion.
We will have a company with
1. A credible and competent management especially after navigating all the sanctions and counter sanctions.
2. A debt free company.
3. A cash rich company.
4. A dividend paying company
5. A gold producer.
That has to be worth $10 minimum. Think of all the indexes and trackers that will want back in.
@E.Penfold.......I’d say minimum divi of 60 cents per share in the short term, rising with expansion of capacity in both Kaz and West Asia countries thereafter.
IMO it is reasonable to assume a buoyant market for gold in short to medium term given falling interest rates and global geo-politics. The market could even explode if US/EU decide to confiscate Russian reserves held in the West to pay Ukraine, as this would accelerate move away from hard currencies and into gold.
I also think there would be a special divi should POLY secure sale of its Russian business which imo is worth at least $8bn in normal times; equating to approximately $15 per share. But times are not normal so we’ll have to see how that pans out.
One thing I’m absolutely convinced on is the massive current under valuation of the business; sp is trading at less than 25% its true value as compared to its piers operating in the normal world.
Note this is my opinion only...please DYOR
Fingers xd...........
Morning fellow investors. Does any one know if there is any With Holding Tax before we get Dividends.
Thank you
Thanks for this analysis John.
Have you attempted to estimate the future dividend based on Kazakhstan only ?
Https://www.thedailybeast.com/the-real-reason-thousands-are-fleeing-conscription-in-ukraine
“I don’t want to die. I hear that a lot of soldiers who come back from the frontline have psychological issues. They are different men,” says the man who The Daily Beast will call Sergei. “Some will probably have drinking problems and a lot of other issues and no future. I want to have a future.”
Many thanks again, John - I hold with renewed confidence and interesting to see if Mr Nesis mentions penalties or negotiations on the 31st.
I can never respect hypocrites like Jotom and alter ego. They come on here and bash Putin/Russia but are happy to make "blood profits".
Absolute hypocrites trying to fake morals.
I lose patience sometimes with some of the questions people ask.
Nesis said the payments of dividends will be subject to a successful sale of the Russian business. He will not want to annoy people in Moscow by paying dividends from a Russian asset to people from unfriendly countries.
It is blindingly obvious that everything polymetal is tied to the sale of the Russian assets
Shar price rise
Dividends and
Return to LSE
Are all dependent on the sale of PolyR.
@Moorscloud...POLY's objective on divis is stated in its annual reports which reads as follows:
"Our Dividend Policy is for a minimum 50% pay-out of underlying net earnings, paid each half year (subject to absolute Net debt/ previous 12-months’ Adjusted EBITDA ceiling of 2.5x).
Assuming POLY have managed to unwind inventory to normal levels at the year end, I’m expecting EBITDA of around $1.5bn and net profit to be around $1bn for 2023. Given normal times, this should trigger divis of around $500m at least on 2023 earnings, equating to approx $1 per share. So I’m in agreement POLY will yield good divis going forward once situation normalises. I am also holding shares for good divi yield, which have already more than doubled in sp since I bought them in 2022.
Further, forecasts for gold in short/medium terms are very good given falling interest rates over coming years, geo-politics and so on. As far as Russian operation is concerned, there is the added attraction immediately on capitalising on a favourable USD/Rub exchange rates and so any party interested in buying would want to get its hands on the company asap.
I think POLY is seriously looking to offload Russian assets which could be toxic for many years to come given its alliance with China and the geopolitics that entails. Also, the costs of producing gold in Russia is much higher than in Kaz or any other West Asian countries where POLY wants to expand. Currently Russia is highly profitable largely due to favourable exchange rates which will not be the case in the long term. At the same time, POLY have spent many years developing Russian assets which are high quality and so would not want to give it away either, and treat it as a cash cow in coming years in absence of a sale.
I think Nesis said back in October did say that POLY have been approached already by a number of buyers. I personally don’t think there is any shortage of buyers; be it Chinese or Russian. I think any sale agreement would be subject to a favourable settlement with Russian authorities which would mean negotiations. Companies pulling out so far have been from sanctioned countries and so POLY would present a unique situation requiring unique one off solution. The fact that POLY withdrew from UK to sell Russian business and have stated it would return to UK once having done so does not bode well IMO. I think POLY were pressured to say this at the time to calm nerves of shareholders and steady the price.
Russian authorities will interpret this not in a favourable manner and hence will impose a penalty which may well be unacceptable to POLY. In the coming update, I don’t think POLY will elaborate on this any more than to say negotiations are ongoing.
IMO a stumbling block will be the penalty imposed by Russian authorities and not finding of a buyer.
Note this is my opinion only….please DYOR
Fingers xd……..
Thank you for the considered, informative response, John. As you've doubtless realised, I personally am looking at Poly as a long-term divi/income provider and even as this is delayed, the "higher group profits and falling debt" will presumably be reflected in eventual dividends as well as the sp. Do you feel then Poly's concern about the penalties is holding them back from attracting buyers or could it be that a sale is actually actively being sought at this time?