Polyus share price will be supported by gold dynamics

Despite the threat of inflation, large-scale capital outflows from gold ETFs have continued for the third consecutive month. Over the past month, gold gained 6%, while at the same time, Polyus shares gained 16%. Polyus' closest counterpart, shares of Barrick Gold, the world's largest gold producer, have fallen 5% over the year, while Polyus' shares, over the same period, have risen 30%.

Are Polyus shares overvalued and how profitable would a short position on them be? Nikolai Dudchenko, an independent financial analyst, answered Fortrader magazine's question.

- To begin with, let's recall our last review of Russian gold companies and from December 03, 2020. In it, we gave a positive assessment of the companies' growth potential, and I still believe that this potential has not been fully realized.

As expected, Polyus' 2020 statements came out decent. The company's revenue rose by a record 41% to 364.2 billion rubles (257.7 billion a year earlier), but net income fell by 4% to 119.1 billion rubles, versus 124.1 billion in 2019. Two factors are important to note here:

At the same time, the company continues to steadily pay dividends in the amount of 306.6 rubles per share. The dividend yield is currently about 1.95%.

Given the Central Bank's monetary policy course, we can assume that the item of expenses related to exchange rate revaluation will be leveled this year (given Polyus' currency position). At the same time, the stability of gold prices and future growth prospects (see ) may have a positive effect on the Group's revenue growth rates.

Цена на акции «Полюс»

From the technical point of view, the share price remains in the ascending price channel with support around 13,000-13,500 rubles and resistance at 22,000 rubles. According to the Elliott wave analysis, one of the scenarios is when the price is at the beginning of the third impulse wave. The confirmation of the signal to buy, in this case, becomes the breakdown of the historical maximum at 18,770 rubles.