Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Accelerating Tomorrow’s Independent Research

Boost Research

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Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27844" target="_blank" data-smartkarma-citation="entities:27844:1">Yellow Cake PLC (YCA LN)</a> is a pure play on the uranium price</li>
<li>Spot Price $28.90/lb U3O8 &amp; L.T. Price remains $32/lb U3O8
</li>
<li>Share price trading at ~2% discount to NPV</li>
<li>Despite recent production cuts, primary &amp; secondary supplies cover world demand</li>
<li>Est. surplus ~500ktU, representing six years of global primary production</li>
<li>Global nuclear generation peaked in 2006</li>
<li>Forecast world uranium demand to decline between 25% and 40% by 2050</li>
<li>
1-year Target Price £1.98-2.02 ps NPV4% assuming $24/lb U3O8
</li>
<li>
3-year Target Price £1.57-1.77 ps NPV4% assuming $21/lb U3O</li>
</ul>



Yellow Cake PLC (YCA LN) is a pure play on the uranium price
Spot Price $28.90/lb U3O8 &amp; L.T. Price remains $32/lb U3O8

Share price trading at ~2% discount to NPV
Despite recent production cuts, primary &amp; secondary supplies cover world demand
Est. surplus ~500ktU, representing six years of global primary production
Global nuclear generation peaked in 2006
Forecast world uranium demand to decline between 25% and 40% by 2050

1-year Target Price £1.98-2.02 ps NPV4% assuming $24/lb U3O8


3-year Target Price £1.57-1.77 ps NPV4% assuming $21/lb U3O


Yellow Cake (YCA) - Great Idea, Wrong Time!

Thematic (Sector/Industry)

<ul>
<li>Quantifying nuclear statistics with substantial discrepancies</li>
<li>LT contracts &amp; speculative hoarding driving recent 40% spot price increase</li>
<li>Primary/secondary Uranium supplies currently 112% of 2017 demand</li>
<li>Uranium supply deficits extremely unlikely before 2022</li>
<li>Global Uranium demand to fall 25-40% by 2050</li>
<li> Primary Uranium sector LT SELL</li>
</ul>
We have independently audited global nuclear construction statistics in order to determine future Uranium demand.  Although near-term statistics match those in the public domain, long-term demand determined via construction pipeline illustrates substantial discrepancies.  Compiling planned plant construction, operational extensions, nameplate upgrades, versus decommissioning announcements/events, and in many cases, public policy inertia; has led us to believe that despite historical primary supply shortages, global nuclear demand peaked in 2006.
Since plateauing and despite strong Chinese growth, nuclear power generation has fallen &lt;2% over the past two decades, a decline that is predicted to accelerate as a number of developed and developing nations pursue other energy options.
The macro-trend not replacing existing nuclear infrastructure means (dependent on assumptions), according to our calculations, global uranium demand will decrease between 20 to 40% by 2050.
As opposed to signifying a fundamental change in underlying demand, we believe that recent Uranium price increases are the result of producers closing primary operations, and substituting production with purchases on the spot market to meet long-term contract obligations.  In addition, hedge funds are buying physical uranium in order to realise profits on potential future commodity price increases.  Critically, we determine that primary and secondary supplies are more than sufficient to meet forecast demand over the next four to five years; before taking into account substantial existing global uranium stocks, some of which are able to re-enter the spot market at short notice.


Quantifying nuclear statistics with substantial discrepancies
LT contracts &amp; speculative hoarding driving recent 40% spot price increase
Primary/secondary Uranium supplies currently 112% of 2017 demand
Uranium supply deficits extremely unlikely before 2022
Global Uranium demand to fall 25-40% by 2050
 Primary Uranium sector LT SELL

We have independently audited global nuclear construction statistics in order to determine future Uranium demand.  Although near-term statistics match those in the public domain, long-term demand determined via construction pipeline illustrates substantial discrepancies.  Compiling planned plant construction, operational extensions, nameplate upgrades, versus decommissioning announcements/events, and in many cases, public policy inertia; has led us to believe that despite historical primary supply shortages, global nuclear demand peaked in 2006.
Since plateauing and despite strong Chinese growth, nuclear power generation has fallen &lt;2% over the past two decades, a decline that is predicted to accelerate as a number of developed and developing nations pursue other energy options.
The macro-trend not replacing existing nuclear infrastructure means (dependent on assumptions), according to our calculations, global uranium demand will decrease between 20 to 40% by 2050.
As opposed to signifying a fundamental change in underlying demand, we believe that recent Uranium price increases are the result of producers closing primary operations, and substituting production with purchases on the spot market to meet long-term contract obligations.  In addition, hedge funds are buying physical uranium in order to realise profits on potential future commodity price increases.  Critically, we determine that primary and secondary supplies are more than sufficient to meet forecast demand over the next four to five years; before taking into account substantial existing global uranium stocks, some of which are able to re-enter the spot market at short notice.

Uranium - About to Enter Its Own Nuclear Winter

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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The Best Ideas list is a compilation of stock ideas sourced from Morningstar’s global equity research team. With more than 100 analysts covering nearly 1,500 companies, we’re able to provide a wide variety of what we believe are attractively priced securities looking across sectors, industries, and geographies. Best Ideas are nominated by analysts and approved by managers in addition to the normal due diligence processes that precede our published research and ratings.The list may include a broad mix of quality and risk characteristics to meet varying investor needs, including no-, narrow-, and wide-moat companies as well as the full spectrum of uncertainty ratings from low to very high. Most or all of the highlighted stocks will be trading at a discount to our estimate of intrinsic value, indicating improved odds of capital appreciation.

The Best Ideas list is a compilation of stock ideas sourced from Morningstar’s global equity research team. With more than 100 analysts covering nearly 1,500 companies, we’re able to provide a wide variety of what we believe are attractively priced securities looking across sectors, industries, and geographies. Best Ideas are nominated by analysts and approved by managers in addition to the normal due diligence processes that precede our published research and ratings.The list may include a broad mix of quality and risk characteristics to meet varying investor needs, including no-, narrow-, and wide-moat companies as well as the full spectrum of uncertainty ratings from low to very high. Most or all of the highlighted stocks will be trading at a discount to our estimate of intrinsic value, indicating improved odds of capital appreciation.

Asia Long-Short PM/Analyst

Curtis Lehnert

Kazatomprom Natsionalnaya Atomnaya Kompaniya / Equity Bottom-Up

Kazatomprom Natsionalnaya Atomnaya Kompaniya

Kazakhstan, the 9th largest country by land mass in the world and largely forgotten about since 'Borat' hit theaters in 2006, is exploding back onto the world stage with a string of state-owned company privatizations starting with the national uranium company, Kazatomprom. I like! OK, enough Borat jokes.Kazakhstan is a fascinating place. It has a massive land area roughly the size of Argentina, yet with a population roughly equal to the five boroughs of New York City. It's an entirely landlocked country, yet has a navy based on the Caspian Sea. In the Kazakh language "qanağattandırılmağandıqtarıñızdan" is an actual word. It's one of the most ethnically diverse countries in the world due to its proximity to a large number of ethnic groups and the fact that Stalin deported various ethnic groups there during WWII. The society has traditionally been agrarian and nomadic with much of the culture revolving around horses. The traditional sport "kyz kuu", literally translated as “girl chasing” is basically a race between a man and woman, both on horseback, that either ends up with the man kissing the woman or the woman beating the man with a whip. Horse meat is a favorite food and the local drink, Kumis, oft referred to as "milk champagne" is just fermented horse milk.  You could tell me pretty much anything about Kazakhstan at this point and I'd probably believe it.Leaving it's oddities aside, Kazakhstan is loaded with natural resources. In fact, 74% of industrial production in the country comes from the mineral and natural resource output. For the rest of this insight, I will focus specifically on uranium, the element that Kazakhstan maintains leading production volumes of globally and <a href="https://www.smartkarma.com/entities/27734" target="_blank" data-smartkarma-citation="entities:27734:1">Kazatomprom Natsionalnaya At (KZAP KZ)</a>, the state-owned leader of uranium mining in Kazakhstan. Yakshemash. OK, last one seriously.Kazatomprom is issuing GDRs in London with intention to float 25% of the company. The roadshow is scheduled to start on October 31 with CS and JPM as the leads.In this insight I will cover:<ul>
<li>A brief overview of the uranium industry</li>
<li>Company fundamentals</li>
<li>Financial Information and Valuation Comparisons</li>
<li>No more Borat quotes</li>
</ul>

Kazakhstan, the 9th largest country by land mass in the world and largely forgotten about since 'Borat' hit theaters in 2006, is exploding back onto the world stage with a string of state-owned company privatizations starting with the national uranium company, Kazatomprom. I like! OK, enough Borat jokes.Kazakhstan is a fascinating place. It has a massive land area roughly the size of Argentina, yet with a population roughly equal to the five boroughs of New York City. It's an entirely landlocked country, yet has a navy based on the Caspian Sea. In the Kazakh language "qanağattandırılmağandıqtarıñızdan" is an actual word. It's one of the most ethnically diverse countries in the world due to its proximity to a large number of ethnic groups and the fact that Stalin deported various ethnic groups there during WWII. The society has traditionally been agrarian and nomadic with much of the culture revolving around horses. The traditional sport "kyz kuu", literally translated as “girl chasing” is basically a race between a man and woman, both on horseback, that either ends up with the man kissing the woman or the woman beating the man with a whip. Horse meat is a favorite food and the local drink, Kumis, oft referred to as "milk champagne" is just fermented horse milk.  You could tell me pretty much anything about Kazakhstan at this point and I'd probably believe it.Leaving it's oddities aside, Kazakhstan is loaded with natural resources. In fact, 74% of industrial production in the country comes from the mineral and natural resource output. For the rest of this insight, I will focus specifically on uranium, the element that Kazakhstan maintains leading production volumes of globally and Kazatomprom Natsionalnaya At (KZAP KZ), the state-owned leader of uranium mining in Kazakhstan. Yakshemash. OK, last one seriously.Kazatomprom is issuing GDRs in London with intention to float 25% of the company. The roadshow is scheduled to start on October 31 with CS and JPM as the leads.In this insight I will cover:
A brief overview of the uranium industry
Company fundamentals
Financial Information and Valuation Comparisons
No more Borat quotes


KazAtomProm IPO: Number One Uranium Miner in Kazakhstan...Great Success!

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Commodities

INVESTMENT VIEW:  We believe <a href="https://www.smartkarma.com/entities/27448" target="_blank" data-smartkarma-citation="entities:27448:1">Uranium (UXA COMDTY)</a> prices have the potential to rally further following a number of recent supply-side adjustments aimed at reducing and managing industry oversupply.  
This should bode well for industry majors like <a href="https://www.smartkarma.com/entities/27155" target="_blank" data-smartkarma-citation="entities:27155:1">Cameco Corp (CCJ US)</a> and may also support junior miners like <a href="https://www.smartkarma.com/entities/27449" target="_blank" data-smartkarma-citation="entities:27449:1">Azarga Uranium (AZZ CN)</a> for investors with a higher risk/reward profile. 
The CEO of Toronto listed <a href="https://www.smartkarma.com/entities/27449" target="_blank" data-smartkarma-citation="entities:27449:1">Azarga Uranium (AZZ CN)</a> was in Singapore last week and below is a summary of our conclusions:

INVESTMENT VIEW:   We believe Uranium (UXA COMDTY) prices have the potential to rally further following a number of recent supply-side adjustments aimed at reducing and managing industry oversupply.  
This should bode well for industry majors like Cameco Corp (CCJ US) and may also support junior miners like Azarga Uranium (AZZ CN) for investors with a higher risk/reward profile. 
The CEO of Toronto listed Azarga Uranium (AZZ CN) was in Singapore last week and below is a summary of our conclusions: 

Azarga Uranium Meeting Highlights Industry at Inflection

Canada

Cameco Corporation explores, develops, mines, refines, converts, and fabricates uranium. The Company offers uranium for sale as fuel for generating electricity in nuclear power reactors. Cameco operates worldwide.

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Cameco Corp (CCJ US)

Yellow Cake (YCA) - Great Idea, Wrong Time!

Yellow Cake PLC (YCA LN) is a pure play on the uranium price Spot Price $28.90/lb U3O8 & L.T. Price remains $32/lb U3O8 Share price trading...

Boost Research

Uranium - About to Enter Its Own Nuclear Winter

Quantifying nuclear statistics with substantial discrepancies LT contracts & speculative hoarding driving recent 40% spot...

Boost Research

Best Ideas List for January 2019

The Best Ideas list is a compilation of stock ideas sourced from Morningstar’s global equity research team. With more than 100 analysts covering...

Morningstar, Inc.

KazAtomProm IPO: Number One Uranium Miner in Kazakhstan...Great Success!

Kazakhstan, the 9th largest country by land mass in the world and largely forgotten about since 'Borat' hit theaters in 2006, is exploding back...

Curtis Lehnert

Azarga Uranium Meeting Highlights Industry at Inflection

INVESTMENT VIEW: We believe Uranium (UXA COMDTY) prices have the potential to rally further following a number of recent supply-side adjustments...

Charles Spencer

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)