Profile image - Gemfields group, Kagem - 16072019 - JPG

Gemfields Group

JP: GML

ZAR2257m market cap

ZAR1.6 last close

Gemfields is a world-leading supplier of responsibly sourced coloured gemstones. It owns 75% of Montepuez Ruby Mining in Mozambique, 75% of the Kagem emerald mine in Zambia, the Fabergé jewellery business and investments in Jupiter Mines and Sedibelo Platinum.

Investment summary

Our updated sum-of-the-parts (SOTP) valuation of Gemfields is ZAR4.91 per share before taking into account the planned buyback of up to 10% of the issued share capital. If the buyback was fully executed at the current share price of ZAR1.65/share, the SOTP would increase to ZAR5.31/share. Gemfields’ agreed sale of its stake in Jupiter for A$44.24m (US$30.5m) funds a planned return of capital to shareholders totalling US$24.68m, split between the share buyback and a subsequent special dividend. On the back of total H1 auction sales from Kagem and Montepuez Ruby Mining (MRM) of US$83.2m, we have adjusted our full-year auction sale forecast down to US$180.4m (from US$193.7m previously).

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2017A 81.7 30.5 55.8 3.9 2.9 N/A
2018A 206.1 58.9 (22.5) (2.3) N/A N/A
2019E 198.6 39.0 19.9 (0.1) N/A N/A
2020E 225.0 53.1 24.0 (0.2) N/A N/A
Last updated on 25/07/2019
Industry outlook

The coloured gemstone market is significantly smaller than the world diamond market at US$2–3bn pa in rough gemstone production, putting Gemfields’ current market share at just under 10% of world supply. Per carat prices for emeralds and rubies can exceed white diamond prices and while firm data on the fragmented coloured gemstone market are limited, all available evidence including the trend in coloured gemstone prices at auctions points to increased demand and a strongly growing market (with some commentators seeing total market sales growth of >20% pa).

Last updated on 25/07/2019
Share price graph
Balance sheet
Forecast net cash (US$m) 32.5
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 6.0 (9.1) (38.5)
Relative* 7.9 (6.9) (39.2)
52-week high/low ZAR2.6/ZAR1.4
*% relative to local index
Key management
Sean Gilbertson CEO
David Lovett CFO

Content on Gemfields Group