I've known KGHM for some time (a Polish man here). Due to debt and narrow margins, they are essentially a leveraged play on silver and copper. This is a great stock for swing traders, but I struggle with it as a value play.
The government owns 32%, and they put most of the management in place. There's constant pushback from major private shareholders and funds but it is futile. There is management change every 4-8 years depending on the party that won the election. Governance is pretty bad and communication with investors is also not the best for the 11th biggest company by market cap in the country. Over the years there were many pivots and unrealized promises that destroyed trust. With that shareholder base, it is hard to see this change.
Polish mining operations aren't the most efficient or profitable compared to the competitors so it is hard. There has never been a buyback (unfortunately little known or appreciated practice in Poland) and the dividend is just 1%.
Having said that it is hard to see it rerate to any sensible multiple or create a good shareholder yield. Nonetheless, It could have a ~50% runup in price in the next few months based on the growing commodity prices.
Personally not a comodity investor, unless its super great deal like Valeura. I personally have 3 bets in middle Europe, 4mass, polish growing cosmetics company ať single digit P/E with 1/8 of market cap in buyback fund, XTPL, deep tech with interesting technology that might turn profitable in next 12-24 months and Vilkyskiu Pienine, which is milk products producer at P/E 4, that will finish new capacity increasing revenues by 50% in 2025.
Poland is great market full of hidden gems and as you said, valuations are put under preassure by high bond yields and war.
Do you know what's their cost of mining copper? If they're a high cost producer the share price will reflect that. I'm not sure a P/S ratio is apropriate for valuate mining companies.
Wait... I thought Portillo's was the kielbasa trade on this sub?
I've known KGHM for some time (a Polish man here). Due to debt and narrow margins, they are essentially a leveraged play on silver and copper. This is a great stock for swing traders, but I struggle with it as a value play.
The government owns 32%, and they put most of the management in place. There's constant pushback from major private shareholders and funds but it is futile. There is management change every 4-8 years depending on the party that won the election. Governance is pretty bad and communication with investors is also not the best for the 11th biggest company by market cap in the country. Over the years there were many pivots and unrealized promises that destroyed trust. With that shareholder base, it is hard to see this change.
Polish mining operations aren't the most efficient or profitable compared to the competitors so it is hard. There has never been a buyback (unfortunately little known or appreciated practice in Poland) and the dividend is just 1%.
Having said that it is hard to see it rerate to any sensible multiple or create a good shareholder yield. Nonetheless, It could have a ~50% runup in price in the next few months based on the growing commodity prices.
I agree with that, cheap commodity torque
I lost a lot of money on this stock last year due to my own mistakes.
Anyway, KGHM Stock price is highly correlated to silver price. If u want it long-term, consider buying when silver is down.
Great insight, thank you
Personally not a comodity investor, unless its super great deal like Valeura. I personally have 3 bets in middle Europe, 4mass, polish growing cosmetics company ať single digit P/E with 1/8 of market cap in buyback fund, XTPL, deep tech with interesting technology that might turn profitable in next 12-24 months and Vilkyskiu Pienine, which is milk products producer at P/E 4, that will finish new capacity increasing revenues by 50% in 2025.
Poland is great market full of hidden gems and as you said, valuations are put under preassure by high bond yields and war.
Yeah, I know there are a lot of great small caps in Poland. It's just so hard to do due diligence.
you can always consult me, I am the native and have a lot of contacts in PL ;)
Hi, Miroslav. Whats your price target of VILVI? Thanks and greetings from Lithuania
I´ll send you DM.
Do you know what's their cost of mining copper? If they're a high cost producer the share price will reflect that. I'm not sure a P/S ratio is apropriate for valuate mining companies.
The really big problem is the capital allocation policy. High cost miners have more torque to rising prices.