Департамент торговых идей

The main barometer of the state of Kazakhstan economy – oil prices increased by 30% in 2018 from an average of $54 per barrel to $70, while rising above $80 in autumn, but dropping to $50 by the end of the year. Such significant growth of the main item of Kazakhstan exports did not fail to have a positive impact on public finances and external accounts of the country where the movement toward balance was observed for the first time since 2014, when oil prices started to fall from $100 per barrel. Even with the strong rise in oil prices, economic growth in 2018 has remained at the level of the previous year at 4.1% in 2017, indicating the lack of drivers for further acceleration. Thus, the peak of the growth in the current economic cycle had already passed. It also says about weak impact of economic policy of the State that continues to rely on the commodity sector. 

For the reported period, the Company produced 729 556 oz of gold (-7% y/y), of which 534 563 oz of gold (73%)  was produced at Kumtor (-7% y/y) and 194 993 oz of gold (27%) was produced at Mount Milligan (-12% y/y). The latter produced 21 364,2 tons of copper (-12% y/y).

During the 4Q2018, Centerra Gold produced 288 367 oz of gold (+33% y/y), of which 288 096 oz of gold  was produced at Kumtor (+44% y/y) and 60 271 oz of gold was produced at Mount Milligan (+3% y/y). The latter produced 5 352,4 tons of copper (-4% y/y).

Due to the ambiguous inventory estimates proposed by Nostrum in 9M2018, we lowered our expectations for oil production and adjusted the oil price forecast, taking into account the current state of commodity markets. Our changes were reflected in the 12M target price reduction from the previous 233 to 135 GBp/share. Uncertainty about drilling results continues to be a significant risk and we maintain our “Hold” recommendation for Nostrum shares. At the same time, we are neutral regarding the company's bonds and expect that, due to the inability of timely maturity of bonds, Nostrum will again resort to refinancing, and therefore also maintain the recommendation “Hold” on Nostrum bonds.

According to 2018 operating results, the Company produced 14 049 tons of copper on Kounrad (-0,38% y/y), 22 532 tons of zinc concentrate (+4,39% y/y) and 29 388 tons of lead concentrate (-1,65% y/y) on SASA. CAML has confirmed its production results for 2018 in the range between 13 000-14 000 tons of copper, 21 000 -23 000 tons of zinc concentrate and 28 000-30 000 tons of lead concentrate.

According to KazTransOil, the Ministry of Energy of the Republic of Kazakhstan revised the tariffs for transit oil transportation of 10mn tons per year from Russia to China, approving for the period 2019-2023 tariff of $15/ton. In particular, in the section “Border of Russia - Priirtyshk-Atasu (RK)”, including oil transshipment at the HOPS “Atasu” - $4.23/ton and in the section Atasu - Alashankou (China) - $10.77/ton.

Inflation slowed in December, in comparison with the previous month to 0.7% (0.9% in November), the annual rate remained at the level of October and November at 5.3% (7.1% in 2017), average per year was 6% (7.4% in 2017).