vk.com/id446425943
Gold Fields – SELL
Renaissance Capital
6 February 2019
Metals & Mining
Figure 92: Gold Fields, $mn (unless otherwise noted) |
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Gold Fields |
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GFIJ.J |
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Target price, ZAR: |
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43 |
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Market capitalisation, $mn: |
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3,334 |
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Share price, ZAR: |
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54 |
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Enterprise value, $mn: |
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4,764 |
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Potential 12-month return: |
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-16.8% |
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Dec-YE |
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2016 |
2017 |
2018E |
2019E |
2020E |
Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
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Income statement |
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Balance sheet |
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Revenue |
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2,749 |
2,811 |
2,552 |
2,988 |
3,051 |
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Net operating assets |
4,449 |
4,711 |
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4,461 |
4,342 |
4,159 |
EBITDA |
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1,361 |
1,407 |
1,274 |
1,622 |
1,570 |
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Investments, net of rehab provision |
-93 |
-6 |
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-2 |
-2 |
-2 |
EBIT |
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690 |
635 |
574 |
817 |
695 |
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Equity |
3,067 |
3,276 |
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2,811 |
3,103 |
3,281 |
Other items |
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-247 |
-251 |
-257 |
-241 |
-231 |
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Minority interest |
123 |
127 |
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126 |
130 |
133 |
Net interest |
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-51 |
-31 |
-4 |
-88 |
-84 |
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Net debt |
1,166 |
1,303 |
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1,523 |
1,107 |
744 |
Taxation |
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-192 |
-172 |
81 |
-175 |
-143 |
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Balance sheet ratios |
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Minority interest in profit |
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11 |
11 |
-3 |
-19 |
-18 |
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Net profit for the year |
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185 |
-13 |
-294 |
319 |
241 |
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Gearing (net debt/(net debt+equity)) |
27.5% |
28.4% |
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35.1% |
26.3% |
18.5% |
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Headline earnings |
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208 |
194 |
139 |
319 |
241 |
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Net debt to EBITDA |
0.9x |
0.9x |
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1.2x |
0.7x |
0.5x |
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Headline EPS, USc |
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26 |
24 |
16 |
40 |
29 |
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RoCE |
14.4% |
12.7% |
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11.7% |
17.7% |
15.5% |
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RoIC (after tax) |
11.0% |
9.7% |
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12.1% |
13.3% |
11.7% |
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Thomson Reuters consensus HEPS, USc |
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11 |
22 |
26 |
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RoE |
7.1% |
6.1% |
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4.6% |
10.8% |
7.6% |
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DPS declared, USc |
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8 |
7 |
4 |
13 |
10 |
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Cash flow statement |
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Underlying EBIT |
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Operating cash flow |
1,332 |
1,150 |
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1,239 |
1,417 |
1,429 |
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South Africa Region |
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15 |
-25 |
-58 |
33 |
24 |
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Capex (net of disposals) |
-649 |
-834 |
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-799 |
-638 |
-698 |
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EBIT margin |
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4% |
-7% |
-28% |
10% |
7% |
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Other cash flows |
-492 |
-237 |
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-602 |
-217 |
-186 |
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West Africa Region |
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227 |
221 |
204 |
263 |
245 |
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Free cash flow |
191 |
79 |
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-162 |
563 |
545 |
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EBIT margin |
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25% |
25% |
23% |
26% |
24% |
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Equity shareholders' cash |
113 |
-36 |
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-173 |
486 |
472 |
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South America Region |
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67 |
108 |
97 |
89 |
58 |
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Dividends and share buy-backs |
101 |
-100 |
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-48 |
-70 |
-108 |
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EBIT margin |
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21% |
27% |
27% |
23% |
19% |
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Surplus (deficit) cash |
214 |
-136 |
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-220 |
416 |
364 |
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Australia Region |
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382 |
332 |
331 |
432 |
368 |
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Cash flow ratios |
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EBIT margin |
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32% |
28% |
30% |
34% |
27% |
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Adjusted EBIT |
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690 |
635 |
574 |
817 |
695 |
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Working capital turnover, days |
-23 |
-8 |
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-2 |
-1 |
-4 |
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Income statement ratios |
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FCF yield |
4.0% |
1.7% |
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-3.6% |
12.4% |
13.0% |
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Equity shareholders' yield |
3.2% |
-1.2% |
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-6.1% |
14.7% |
14.2% |
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EBITDA margin |
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49% |
50% |
50% |
54% |
51% |
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Capex/EBITDA |
47.7% |
59.3% |
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62.7% |
39.3% |
44.5% |
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EBIT margin |
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25% |
23% |
22% |
27% |
23% |
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Cash conversion |
0.5x |
-0.2x |
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-1.2x |
1.5x |
2.0x |
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HEPS Growth |
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750% |
-8% |
-33% |
150% |
-28% |
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Valuation |
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Dividend payout ratio |
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29% |
28% |
26% |
33% |
33% |
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$mn |
ZAR/sh |
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Input assumptions |
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SoTP DCF fair value and calculation of target price |
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South Africa Region |
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591 |
10.3 |
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Gold, $/oz |
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1,248 |
1,258 |
1,269 |
1,350 |
1,338 |
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West Africa Region |
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1,996 |
34.8 |
Copper, $/t |
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4,867 |
6,170 |
6,532 |
6,000 |
6,367 |
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South America Region |
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933 |
16.3 |
ZAR/$ |
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14.70 |
13.31 |
13.24 |
14.31 |
14.14 |
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Australia Region |
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2,379 |
41.5 |
AUD/$ |
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1.34 |
1.30 |
1.34 |
1.38 |
1.28 |
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Other |
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-1,966 |
-34.3 |
PEN/$ |
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3.38 |
3.26 |
3.29 |
3.40 |
3.32 |
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Operating value |
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3,932 |
68.5 |
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Financial instruments and rehab provision as at 31 December 2017 |
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-6 |
-0.1 |
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Gold production volumes, koz |
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Enterprise value |
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3,927 |
68.5 |
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South Africa |
lumes |
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290 |
281 |
155 |
244 |
268 |
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Net debt as at 31 December 2017 |
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-1,303 |
-22.7 |
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West Africa |
lumes |
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644 |
639 |
673 |
790 |
808 |
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Minority interest |
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-127 |
-2.4 |
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South America |
lumes |
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270 |
307 |
302 |
307 |
252 |
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Cash used in share buy-backs during 2018E |
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0 |
0.0 |
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Australia |
lumes |
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942 |
935 |
865 |
934 |
1,010 |
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Equity value |
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2,497 |
43.3 |
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Total lumes |
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2,147 |
2,162 |
1,995 |
2,276 |
2,338 |
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Rounded to |
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43.0 |
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Volume growth |
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-0.6% |
0.7% |
-7.7% |
14.0% |
2.7% |
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Share price on 1/2/2019 |
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53.8 |
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Calculated breakeven price, $/oz |
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Expected share price return |
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-20.0% |
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Plus: expected dividend yield |
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3.2% |
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South Africa breakeven |
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1,192 |
1,342 |
1,763 |
1,126 |
1,155 |
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Total implied one-year return |
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-16.8% |
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West Africa breakeven |
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939 |
885 |
852 |
870 |
886 |
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South America breakeven |
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715 |
611 |
777 |
862 |
907 |
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Share price range, ZAR: |
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Australia breakeven |
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886 |
902 |
857 |
814 |
892 |
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12-month high on 30-1-2019 |
55 |
12-month low on 11-9-2018 |
33 |
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Group breakeven |
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1,028 |
1,012 |
1,025 |
968 |
1,012 |
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Price move since high |
-1.7% |
Price move since low |
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63.4% |
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Contribution to FY18E underlying EBITDA |
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Calculation of WACC |
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WACC |
7.4% |
Cost of debt |
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5.0% |
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South Africa |
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Risk-free rate |
4.0% |
Tax rate |
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30% |
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-1% |
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Equity risk premium |
5.0% |
After-tax cost of debt |
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1.1% |
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Beta |
1.00 |
Debt weighting |
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30% |
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West Africa |
Cost of equity |
9.0% |
Terminal growth rate |
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2.0% |
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Australia |
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36% |
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Valuation ratios |
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49% |
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Dec-YE, $mn |
2016 |
2017 |
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2018E |
2019E |
2020E |
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P/E multiple |
16.5x |
15.8x |
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21.4x |
10.1x |
13.9x |
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Dividend yield |
1.8% |
1.8% |
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1.2% |
3.3% |
2.4% |
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EV/EBITDA |
3.5x |
3.2x |
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3.5x |
2.8x |
2.7x |
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P/B |
1.1x |
0.9x |
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1.0x |
1.1x |
1.0x |
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South America |
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NAV per share, $ |
3.7 |
4.0 |
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3.4 |
3.8 |
4.0 |
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14% |
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NAV per share, ZAR |
55 |
53 |
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45 |
54 |
57 |
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
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