Even though Jusan Invest’s analysts described the last production report by Kazatomprom as «fundamentally negative,» they have recommended buying the stocks as their price can surge by 40%.
The authors of the report have set the target price for Kazatomprom’s stock at $62.40 with the recommendation «to buy,» although they also pointed out that these investments might be risky. As of February 1, the closing price of the stock on the London Stock Exchange (LSE) was $44.60.
On February 1, Kazatomprom released an operational report for 2023; the company said that it executed its production plan at its upper boundary. For instance, in the fourth quarter, the company produced 3.066 tons of uranium, a 375-ton increase over the third quarter. Uranium product sales were also good. Nevertheless, Kazatomprom reduced its sales forecasting from 18,000-18,500 tons to 15,500-16,500 tons in 2023.
The purchasing of sulfuric acid is still a problem for the company. As a result, Kazatomprom has made a set of significant adjustments to its production plan for 2024; its production target is 21,000 to 22,500 tons of uranium for the entire group this year. Moreover, the uranium producer warned that if the problem with sulfuric acid isn’t solved, it will affect its plans for 2025. In its previous forecast, the national company expected its output at 25,500 tons in 2024 and 31,000 to 33,000 tons in 2025.
Interestingly, the published selling price was falling behind the spot price: $52.10 vs $62.50. According to the company, the reason is the time lag between the time of pricing and product delivery. In addition, the company reported a negative impact of long-term contracts signed in the past when prices were much lower. As of December 2023, the long-term price of uranium rose to $68 per pound, Kazatomprom reported.
According to Jusan Invest’s analysts, this report is fundamentally negative because of the presence of some risks for production. However, experts noted that this situation might have a positive impact on spot prices of uranium.
