Deutsche Bank Downgrades Harmony Gold Mining (HMY) to Hold; See Cost Pressures Going Forward
HMY Hot Sheet
Rating Summary:4 Buy, 3 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 16 | Down: 9 | New: 35
Deutsche Bank downgrades Harmony Gold Mining (NYSE: HMY) to Hold. Price target ZAR85.
Deutsche analyst says, "Despite better-than-guided production, rising input cost inflation in South Africa and a strong rand diluted the benefits of a 6% increase in production. Going forward, we expect input cost pressures in SA to persist and expect HAR's current strong balance sheet and solvency position to deteriorate. Given this outlook, we are disappointed that HAR is not taking more aggressive action to improve margins (i.e. high-cost asset disposals), but continues to focus on growth.
"Given a slower-than-expected build-up in production from Hidden Valley and Phakisa, we have downgraded our FY10, FY11 and FY12 earnings expectations by 10%, 11% and 21% respectively. We value HAR on a sum-of-the-parts DCF valuation using a dollar nominal WACC of 9.0% (beta 1.0, ERP: 4.5%, RFR: 5.5%)...Risks to our view include a stronger/weaker ZAR, a stronger/weaker gold price, and a worse/better operating performance."
To see more analyst ratings on HMY Click Here.
Harmony Gold Mining Company Limited engages in underground and surface gold mining. It also involves in related activities, including exploration, processing, and smelting.
Deutsche analyst says, "Despite better-than-guided production, rising input cost inflation in South Africa and a strong rand diluted the benefits of a 6% increase in production. Going forward, we expect input cost pressures in SA to persist and expect HAR's current strong balance sheet and solvency position to deteriorate. Given this outlook, we are disappointed that HAR is not taking more aggressive action to improve margins (i.e. high-cost asset disposals), but continues to focus on growth.
"Given a slower-than-expected build-up in production from Hidden Valley and Phakisa, we have downgraded our FY10, FY11 and FY12 earnings expectations by 10%, 11% and 21% respectively. We value HAR on a sum-of-the-parts DCF valuation using a dollar nominal WACC of 9.0% (beta 1.0, ERP: 4.5%, RFR: 5.5%)...Risks to our view include a stronger/weaker ZAR, a stronger/weaker gold price, and a worse/better operating performance."
To see more analyst ratings on HMY Click Here.
Harmony Gold Mining Company Limited engages in underground and surface gold mining. It also involves in related activities, including exploration, processing, and smelting.
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