POLY & EVR: How soon can these metal & mining stocks recover?

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POLY & EVR: How soon can these metal & mining stocks recover?

 POLY & EVR: How soon can these metal & mining stocks recover?
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Highlights 

  • The Russia-Ukraine war is intensifying every day and the immediate impact is seen in the record rise in average petrol prices in the UK.
  • The share price of companies like Polymetal International and Evraz Plc has corrected significantly to trade at all-time lows.

The Russia-Ukraine war is intensifying every day with no truce in sight yet. The abrupt crisis has led to a decline in global stock markets. Investors are worried that the economic sanctions imposed on Russia, like blocking some Russian banks from Swift payment systems, might adversely impact global trade. The damages of the Russia-Ukraine conflicts are likely to be broader and longer. The immediate impact is seen in the record rise of average petrol prices, which surged past £1.51 per litre for the first time in the UK.

Moreover, essential metals and minerals prices also shoot up in the international market. The ongoing conflict between the two nations is having a negative impact on the companies that have business operations in these two countries. The share price of companies like Polymetal International and Evraz Plc has corrected significantly to trade at all-time lows.

POLY & EVR metal & mining stocks

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Let us look at factors that are impacting the severe rout at these stock counters:

Polymetal International Plc (LON: POLY)

FTSE100 listed company is engaged in the exploration and production of precious metals like gold and silver. The company carries out mining operations in East Kazakhstan and Russia. Also, the company’s stock has a dual listing on London and Moscow Stock Exchange.

Due to the Russia-Ukraine conflict, the company’s stock is down by nearly 66% since 1 February 2022. As per the statement issued on 24 February 2022, the company said its business operations continue as usual. However, the company stated that severe sanctions by the western countries might impact the Russian financial institutions as well as mining companies. Polymetal has informed that it had arranged key equipment suppliers and secured sales channels to ensure business continuity and mitigate some risk in the current situation.

The negative sentiments around the company’s stock were mainly due to volatile trading sessions in Moscow Stock Exchange and its major business operations situated in Russia. Also, investors fear a severe impact on business due to sanctions. However, the company continues to have solid fundamentals. Over the years, the company lifted its business performance and became one of the largest suppliers of precious metals globally. The recent fall in stock price has made the shares attractive in terms of dividend yield (the dividend yield of the stock stands at 29.4% as of 1 March 2022).

In addition, the recent rise in precious metal prices in the international markets will positively impact the revenue and profitability if the company is able to sustain its production output.

Shares of Polymetal International Plc is currently trading at GBX 297.70, down by over 19.8% on 1 March 2022 at 09:40 am GMT+1, with a market cap of £1,663.3 million.

Evraz Plc (LON: EVR)

The metal and mining sector company produce and distributes steel-related products across several countries. The company has mining and processing operations in Russia. It was the major reason that the company’s stock witnessed a massive selloff and is down by over 71% since 1 February 2022.

The upbeat business numbers announced on 25 February 2022 failed to support the investor sentiments. There was a 45.2% rise in the total revenue to USD 14,159 million for the year ended 31 December 2021. In its result statement, the company acknowledged that economic sanctions could impact the business as it has a considerable presence in Russia.

In 2021, the company witnessed a favourable business environment with a record rise in steel prices which helped it to sell its products at a higher price and realise better profits. The net profit for the company stood at USD 3,107 million (FY2020 net profit: USD858 million).

The recent negative sentiment around the stock is mainly due to business links to Russia. Hence, investors should closely keep track of the Russia-Ukraine war. Any positive news like a diplomatic solution to stop war might positively impact the stock price.

Shares of Evraz Plc is currently trading at GBX 131.20, down by over 9.3% on 1 March 2022 at 09:40 am GMT+1, with a market cap of £2,111 million.

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