Tag Archives: ENRC

Business, Finance, Occupation & Industry

Should I Buy Eurasian Natural Resources Corporation?

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By Harvey Jones, The Motley Fool

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LONDON — I’m shopping for shares again, and I’m looking for something cheap to pop into my basket. Should I dig into Eurasian Natural Resources Corporation?

Heavy metals
I’ve been so used to FTSE 100 companies posting solid five-year growth figures that it’s a shock to check the numbers on Eurasian Natural Resources Corporation . Frankly, they’re woeful. All the miners have struggled lately, but few have been as hopeless as this Kazakhstan-based miner and metals company. That said, this could make it an interesting contrarian play. So should I buy ENRC?

If you had invested in ENRC five years ago, you would have lost 78% of your money. You would also have lost heavily over four years, three years, two years, one year and the last month. Financial performance in 2012 was poor, with ENRC posting a net loss of $804 million, against a $1.97 billion profit in 2011. Revenue fell 18% to $6.32 billion. It also suffered a slew of costly writedowns totaling $1.5 billion, including a $608 million impairment charge on its Kazakhstan aluminum business. Investors didn’t even get a final dividend. All the major miners have been hit by falling commodity prices, but this is of a different order.

Soviet rocks
ENRC is a troubled company. Since listing on the FTSE 100 in 2007, it has faced a Serious Fraud Office investigation into corruption allegations and a Financial Services Authority probe into its corporate governance. The so-called “Trio” of founding Kazakh shareholders were memorably accused by ousted board member Ken Olisa as being “more Soviet than City”. You need to carry out a careful investigations of your own before trusting your money to this stock.

Yet ENRC‘s share price is up sharply in recent days, helped by broker UBS upgrading its rating from neutral to buy with a target price of 320 pence. That’s 31% above current share price of £2.44. Continuing in a positive vein, ENRC generates solid cash flow from its Kazakhstan assets, with production volumes records in coal, copper, ferroalloys and electricity. Earnings per share (EPS) are set to grow 26% this year and 44% in 2014. Its geographical position, close to giant Chinese and Russian markets, helps cut its transportation costs, giving it an advantage over its rivals.

Dirty diggers
All miners are a little risky, but ENRC is clearly more risky than most. Even its diversification plans seem to add more danger, as it targets two strife-torn lands, the Democratic Republic of the Congo and Zimbabwe. Any investment should be seen as speculative, which is fine, provided you understand the risks you are taking, and limit the potential fall-out. ENRC trades at 8.7 times earnings, which is only marginally cheaper than BHP Billiton and Rio Tinto, both trading at around nine times earnings, with none of the aggro. Better still, they yield 3.9% and 3.6% respectively. With these FTSE 100 stalwarts going cheap, Eurasian Natural Resources Corporation looks too risky for me. More daring investors might decide it’s …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Dow May Rise as Children's Place Beats the Street

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By Roland Head, The Motley Fool

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LONDON — Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average may open 0.16% higher this morning, while the S&P 500 may open up by 0.18%.

Markets began to stabilize in Europe this morning after slipping yesterday afternoon in the wake of Eurogroup President Jeroen Dijsselbloem‘s comments that the Cypriot deal could be a template for future bailouts. He later stepped back from these comments, saying that Cyprus was a special case — but it hasn’t escaped investors’ notice that Malta and Luxembourg are both similarly small countries with oversized financial sectors, just like Cyprus, while Spain and Greece also have problematic banking sectors.

By 7 a.m. EDT, most European markets were broadly unchanged, although in Greece, the Athens Stock Exchange was down by 4.2% following Dijsselbloem’s comments, and Spanish and Italian banks also dropped. In London, the FTSE 100 was up 0.1%, with investment manager Aberdeen Asset Management continuing yesterday’s strong run, up 3.9% at 7:35 a.m. EDT, while Kazakhstan miner Eurasian Natural Resources Corp was down 3.7%, after one of its largest shareholders, copper miner Kazakhmys, reported that it had halved the book value of its 26% stake in ENRC, reducing it to $2 billion.

In the U.S., investors will be watching today’s economic reports closely. First up, at 8:30 a.m. EDT, durable-goods orders are expected to have risen by 4.6% following a 4.9% fall in January. At 9 a.m. EDT, January’s Case-Shiller home price index will provide further information on the strength of the housing-market recovery, while at 10 a.m. EDT February’s new-home sales are expected to show that 417,000 new homes were sold last month, down slightly from 437,000 in January.

Companies reporting earnings before the markets open this morning include Children’s Place, which reported fourth-quarter earnings of $1.15 per share, ahead of consensus estimates of $1.04 per share. However, the firm revised its first-quarter and full-year guidance, suggesting it could fall below consensus expectations. Also due to report is food-testing specialist Neogen, which is expected to report earnings of $0.27 per share and says it has seen a surge in demand for its beef-testing kits following recent scandals involving the use of horse meat in beef products.

Let’s not forget that the Dow’s daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.” If you, like Buffett, are convinced of the long-term power of the Dow, you should read “5 Stocks To Retire On.” Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

The article Dow May Rise as Children’s Place Beats the Street originally appeared on Fool.com.


Roland Head has no position in any stocks mentioned. …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is Now the Time to Buy Kazakhmys?

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By Rupert Hargreaves, The Motley Fool

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LONDON — I’m always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I’m hoping to pinpoint the very best buying opportunities in today’s uncertain market.

Today I am looking at Kazakhmys  to determine whether you should consider buying the shares at 570 pence.

I am assessing each company on several ratios:

  • Price/earnings (P/E): Does the share look good value when compared against its competitors?
  • Price/earnings-to-growth (PEG): Does the share look good value factoring in predicted growth?
  • Yield: Does the share provide a solid income for investors?
  • Dividend cover: Is the dividend sustainable?

Let’s look at the numbers

Stock Price 3-Year EPS Growth Projected P/E PEG Yield 3-Year Dividend Growth Dividend Cover
Kazakhmys 570 pence 170% 7.3 0.1 2.6% (26%) 10

The consensus analyst estimate for next year’s earnings per share is $1.18 (up 70%), and dividend per share is $0.15 (down 12%).

First, I should mention that in a trading update released last month, Kazakhmys reported that profits for 2012 were $368 million, which I believe gives the company an earnings-per-share figure of approximately $0.70. However, Kazakhmys’ full-year audited results will not be released until the end of March.

Furthermore, Kazakhmys is facing a potential multibillion-dollar writedown, which could significantly affect the final 2012 results.

Anyway, Kazakhmys is currently trading on a projected P/E of 7.3, slightly cheaper than its peers in the mining sector, which are currently trading on an average P/E of around 10.4.

Kazakhmys’ P/E and predicted growth rate give a PEG ratio of around 0.1. However, because of the uncertainty surrounding Kazakhmys’ future near-term earnings, I believe this figure cannot help with my analysis.

Offering a 2.6% yield, the company’s shares offer an income about level with that of the mining sector’s average. However, over the past three years, Kazakhmys’ dividend has fallen a compounded 26%, implying that the yield could soon lag that of its peers.

That said, the dividend is about 10 times covered by earnings, giving Kazakhmys plenty of room for further payout growth.

Kazakhmys appears cheap, but is now the time to buy?
Kazakhmys is one of the largest copper miners in the world. However, similar to its peers, Kazakhmys’ earnings are coming under pressure from falling commodity prices and rising costs.

Indeed, within Kazakhmys’ latest trading statement, the company reported that profits had fallen 70% during 2012.

Furthermore, because of falling profits, Kazakhmys was forced to increase its borrowing to finance planned capital expenditure for the year. Loans increased by 30%, which pushed the company from a net cash position of $19 million to a net debt position of $800 million.

Finally, in addition to falling profits and rising debt, Kazakhmys is facing a potential multibillion-dollar writedown of its investment in Eurasian Natural Resources.

Kazakhmys holds 26% of ENRC, which was originally valued at $3.2 billion. However, because of ENRC‘s falling share price, Kazakhmys’ investment is now worth only $1.5 billion, indicating that Kazakhmys is facing a potential $1.7 billion loss.

So with profits falling, debt increasing, and the risk …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

What You Were Buying Last Week: Kazakhmys

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By Jon Wallis, The Motley Fool

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LONDON — One of Warren Buffett‘s famous investing sayings is “Be fearful when others are greedy and greedy only when others are fearful.” In other words, sell when others are buying and buy when they’re selling.

But we might expect Foolish investors to know that, so looking at what Fools have been buying recently might well provide us with some ideas for good investments.

So, in this series of articles, we’re going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so and what might have made them decide to do so.

A 50% discount
At No. 8 in the latest “Top 10 Buys” is Kazakhmys , the Kazakhstan copper mining company. (Based on aggregate data from The Motley Fool ShareDealing Service.) On the face of it, it doesn’t seem an immediately appealing prospect. Its share price is down more than 66% since it floated in 2005, and it’s lost a whopping 33% of its value this year alone.

But perhaps that was the attraction. At its current price, Kazakhmys appears to be on a discount of about 50% to its tangible net asset value (TNAV), which ought to provide some reassurance of downside protection. Furthermore, Kazakhmys has plans to bring two new mines online by 2015, which would increase its production by over 50%, albeit at a cost of 2.5 billion pounds. If copper prices rise, the share price could well do likewise. But a lot could happen between now and 2015, and if the price of copper falls…

Buying Kazakhmys also gets you an indirect investment in another FTSE 100 company, the natural resources group Eurasian Natural Resources Corporation (ENRC), in which Kazakhmys has a 26% stake. However, that may not be a good thing, considering ENRC‘s own dreadful performance since its flotation in 2007 and the questions surrounding its corporate governance and certain business activities (questions asked by both the Financial Services Authority and Serious Fraud Office, no less).

Kazakhmys’s stake in ENRC lost more than half its value over the course of 2012, which serves to reduce its discount to TNAV to about 30%, and it recently announced that it may have to consider an impairment. But that will have to wait until after ENRC‘s full-year results on March 20. Shareholders, old and new, will therefore be awaiting Kazakhmys’s preliminary full-year results on March 26 with keen interest.

A high-quality growth share
If you’re looking for a high-quality growth share, you’ll want to get hold of “The Motley Fool’s Top Growth Share for 2013,” the latest report by the Fool’s expert analysts and has only just been released.

It’s completely free of charge, but like all special reports from the Fool, it will only be available for a limited period, so get your copy delivered to your inbox now!

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The article What You Were Buying Last Week: Kazakhmys originally appeared on Fool.com.


…read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Are These the Ultimate Retirement Shares?

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By Roland Head, The Motley Fool

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LONDON — The last five years have been tough for those in retirement. Portfolio valuations have been hammered and annuity rates have plunged. There’s no sign of things improving anytime soon, either, as the eurozone and the U.K. economy look set to muddle through at best for some years to come.

A great way of protecting yourself from the downturn, however, is by building your retirement fund with shares of large, well-run companies that should grow their earnings steadily over the coming decades. Over time, such investments ought to result in rising dividends and inflation-beating capital growth.

In this series, I’m tracking down the U.K. large caps that have the potential to beat the FTSE 100 over the long term and support a lower-risk income-generating retirement fund (you can see all of the companies I’ve covered so far on this page).

Over the last few weeks, I’ve looked at United Utilities , Eurasian Natural Resources , Intertek Group , InterContinental Hotels Group  and Aberdeen Asset Management .

Let’s take a look at how each of them scored against my five key retirement share criteria:

Criteria

Eurasian Natural
Resources

United Utilities

InterContinental
Hotels Group

Intertek Group

Aberdeen Asset
Management

Longevity

2/5

2/5

3/5

3/5

2/5

Performance vs. FTSE

2/5

3/5

5/5

5/5

5/5

Financial strength

3/5

3/5

4/5

4/5

5/5

EPS growth

3/5

3/5

4/5

5/5

5/5

Dividend growth

1/5

3/5

4/5

4/5

5/5

Total

11/25

14/25

20/25

21/25

22/25

Eurasian Natural Resources
A history of dodgy corporate governance, problematic debt levels, and a looming dividend cut all take the shine off miner ENRC‘s recently improved production figures. To be fair, ENRC does have some decent assets, but its debt-fueled expansion drive has left it looking short of cash and vulnerable to an opportunistic takeover.

The company is expected to cut its dividend by 50% this year, leaving ENRC shares with a likely forward yield of just 1.8%, well below the solid 3% or more offered by mega-cap miners BHP Billiton and Rio Tinto. The investment case for ENRC is far more speculative and while investors may end up with a good result, this company simply isn’t suitable for an income-focused, low-maintenance retirement portfolio.

United Utilities
It may be surprising to see a high-yielding utility stock score so badly in this review, but at present, I don’t think United Utilities is a very good example of this type of company. It has lagged the FTSE 100 over the last 10 years, during which it has carried out a confusing mixture of acquisitions and divestments and been forced to raise 1 billion pounds from shareholders in a rights issue.

United’s identity as a regional water and sewage company is now more clearly defined, but like its water peer Severn Trent, United currently trades on a forward price-to-earnings ratio (P/E) of 17, making it look quite expensive. For retirement investors, I believe electricity utilities currently offer much better value — National Grid currently has a forward P/E of just 13.4 and offers a forecast dividend yield of 5.7%, considerably higher than the prospective 4.8% on offer from United.

InterContinental Hotels Group
InterContinental Hotels’ brand-focused business model means that it owns very few hotels, preferring instead to license its brands to third-party hotel operators. The strength of InterContinental’s’ …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 FTSE 100 Shares Trading on Big Discounts

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By G. A. Chester, The Motley Fool

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LONDON — If someone offered you the opportunity to buy 1-pound coins for, say, 80 pence, you’d be mad not to accept, wouldn’t you?

Yet, there are companies around that are priced such that you’re paying less than 1 pound for every 1 pound of their assets. OK, so it’s not quite the same as 1-pound coins for 80 pence, but you get the idea: Stocks trading at a discount to the value of their assets could be bargains.

FTSE 100 companies Royal Bank of Scotland Group  , Hammerson , and Kazakhmys  are all trading at discounts to their tangible net asset values (TNAV).

Kazakhmys
Kazakhstan copper miner Kazakhmys is on the biggest discount of the three companies. At the last balance sheet date — which is as long ago as the half-year ended June 30, 2012 — the TNAV per share was around 1,100 pence (using current exchange rates). At the time of writing, the shares are trading at 559 pence — or a discount of almost 50%.

However, Kazakhmys has a 26% stake in diversified natural resources group Eurasian Natural Resources Corporation (ENRC), itself a FTSE company. At the half-year stage, Kazakhmys said the carrying value of its investment in ENRC was around 1.6 billion pounds more (using current exchange rates) than its share of ENRC‘s market value. Adjusting for that, the discount comes down to around 30%.

Kazakhmys said in a trading update last week that it was reviewing the carrying value of the holding in ENRC and will report any impairment in full-year results on March 26. I believe Kazakhmys’ shares at 559 pence will still be at a significant discount to TNAV whatever the outcome of the review.

Hammerson
Hammerson, a U.K. real estate investment trust, which also owns properties in France, had a transformational year in 2012. This 3.7 billion pound company executed over 1 billion pounds of investment activity during the year as it repositioned itself as a pure retail-focused company.

Hammerson released its annual results just a few days ago, so we have a TNAV number that’s about as fresh as it can be. At the balance sheet date of Dec. 31, TNAV per share was 542 pence. As I write, the shares are trading at 505 pence, giving a discount of 7%.

Hammerson delivered a confident outlook statement in its results, and said it was “targeting strong growth in earnings and dividends over the three-year period to 2015.”

Royal Bank of Scotland
Bailed-out bank RBS is four years into its recovery plan, and has targeted 2013 as its last big year of restructuring.

In its annual results released last week, the group reported TNAV per share of 446 pence at the balance sheet date of Dec. 31. At the time of writing, the shares are trading at 306 pence — or a discount of 31%.

The end of year TNAV was down 11% on the 501 pence of a year earlier. The current discount still looks attractive, even allowing for a further decline in the value …read more
Source: FULL ARTICLE at DailyFinance