Weekly Reports | Aug 27 2024
This story features BOSS ENERGY LIMITED. For more info SHARE ANALYSIS: BOE
The world’s largest uranium producer, Kazatomprom cuts FY25 guidance sparking a flame under uranium stock prices.
-Kazatomprom cuts FY25 production guidance
-Sulpuric acid supplies remain problematic
-Share prices rally in response
-U308 spot market flat on the week
By Danielle Ecuyer
Uranium production challenges, how bad is it?
The big news of the week came in the form of Kazatomprom’s cut to FY25 production guidance last Friday (August 23).
Kazatomprom flagged construction delays at new developed deposits and a shortage of sulphuric acid as the reasons for a lowered guidance to 55mlbs-68.9mlbs of U308 from 79.3mlbs-81.9mlbs.
Sulphuric acid supplies are being impacted from delays in new acid plants, increased competition from the fertiliser industry and trade restrictions, industry consultant TradeTech highlights.
Morgan Stanley highlights revised guidance still represents a 12% increase on 2024. The announcement was in line with the broker’s expectation but below what market consensus was positioned for.
TradeTech concurs, suggesting the cut in guidance was “significantly more than market participants were expecting”.
The spot uranium market responded initially with buyers moving in at US$82lb and sellers reacting to the demand. Friday ended with buyers and sellers agreeing on a US$81lb U308 price, representing no change on the week.
Although the physical market’s response was relatively muted, the stock prices of uranium equities bounced on the news. Canada’s Comeco rallied 5.57% on Friday with equally strong share price appreciation for Australian uranium producers and explorers as a follow up on Monday.
Morgan Stanley’s analysis of the physical market suggests a supply/demand deficit remains, but it is notably smaller than in previous years. The broker points to Kazatomprom’s commitment to 2025 contractual obligations with the company intending to use “comfortable level of inventories” to meet any production shortfalls.
Kazatomprom also highlighted no further production guidance will be given until the same time next year for FY26.
With the spot uranium price approaching Morgan Stanley’s 4Q24 price forecast of US$79lb, the broker views there is “limited downside”.
Low levels of contracting activity, down -71% in 1H2024 from the US ban on Russian imports and the higher uranium price, infers to Morgan Stanley that positioning on the sidelines is apposite at this stage in the cycle.
U308 sellers ready and waiting in the spot market
The spot U308 price remains up 39% year-on-year and down -12% calendar year-to-date, with volatility at 24%, TradeTech observes.
The Mid-Term U308 price stands at US$90lb and the Long-Term price at US$82lb.
In sector news, the World Nuclear Symposium in London is coming up on Sept 4-6 and TradeTech revealed Kazakhstan is moving forward to public hearings as the government advances towards the country’s construction and operation of its first nuclear plant.
Last Monday, China approved a record 11 reactors across five states for US$31bn with construction taking about five years, according to state media, TradeTech noted.
The International Atomic Energy Agency (IAEA) reported in its annual publication nuclear power lifted 2.6% in 2023 from 2022 and generated 10% of the world’s electricity in 2023.
Boss Energy, just too cheap
Shaw and Partners revised earnings forecasts by -37% for FY25 and -15% for FY26 for Boss Energy ((BOE)) on a slower ramp up in Honeymoon with an accompanying fall in the target price to $4.20 from $4.75.
The stock was upgraded to Buy from Hold with the -50% drawdown as of August 23 viewed as “overdone” and the -45% discount to valuation considered “excessive”.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 23/08/2024 | 0.0600 |  -16.67% |
$0.19 | $0.05 | |||
| AEE | 23/08/2024 | 0.1400 |  4.00% |
$0.36 | $0.12 | |||
| AGE | 23/08/2024 | 0.0400 | 0.00% | $0.08 | $0.03 | $0.100 | 150.0% |
|
| AKN | 23/08/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 23/08/2024 | 0.1100 | 4.17% |
$0.20 | $0.07 | |||
| BKY | 23/08/2024 | 0.3200 | 1.64% |
$0.45 | $0.26 | |||
| BMN | 23/08/2024 | 2.5000 | – 4.24% |
$4.87 | $1.86 | $7.400 | 196.0% |
|
| BOE | 23/08/2024 | 3.2000 | – 0.34% |
$6.12 | $2.86 | 46.1 | $4.875 | 52.3% |
| BSN | 23/08/2024 | 0.0400 | 14.29% |
$0.21 | $0.03 | |||
| C29 | 23/08/2024 | 0.0800 | 0.00% | $0.12 | $0.06 | |||
| CXO | 23/08/2024 | 0.1000 | 7.53% |
$0.45 | $0.08 | $0.093 | – 6.7% |
|
| CXU | 23/08/2024 | 0.0200 | 0.00% | $0.06 | $0.01 | |||
| DEV | 23/08/2024 | 0.2000 | – 2.44% |
$0.45 | $0.19 | |||
| DYL | 23/08/2024 | 1.1800 | – 0.99% |
$1.83 | $0.85 | -83.6 | $1.770 | 50.0% |
| EL8 | 23/08/2024 | 0.3500 | – 3.23% |
$0.68 | $0.26 | |||
| ERA | 23/08/2024 | 0.0200 | 17.65% |
$0.08 | $0.01 | |||
| GLA | 23/08/2024 | 0.0100 | 100.00% |
$0.04 | $0.01 | |||
| GTR | 23/08/2024 | 0.0030 | 0.00% | $0.02 | $0.00 | |||
| GUE | 23/08/2024 | 0.0600 | 20.00% |
$0.18 | $0.05 | |||
| HAR | 23/08/2024 | 0.0500 | 0.00% | $0.28 | $0.05 | |||
| I88 | 23/08/2024 | 0.6800 | – 1.64% |
$1.03 | $0.14 | |||
| KOB | 23/08/2024 | 0.1400 | 7.69% |
$0.18 | $0.06 | |||
| LAM | 23/08/2024 | 0.6000 | 7.14% |
$1.04 | $0.56 | |||
| LOT | 23/08/2024 | 0.2600 | – 8.33% |
$0.49 | $0.20 | $0.685 | 163.5% |
|
| MEU | 23/08/2024 | 0.0400 | 0.00% | $0.06 | $0.03 | |||
| NXG | 23/08/2024 | 9.5000 | – 3.46% |
$13.66 | $8.13 | $16.200 | 70.5% |
|
| ORP | 23/08/2024 | 0.0500 | 0.00% | $0.12 | $0.05 | |||
| PDN | 23/08/2024 | 10.9000 | – 1.82% |
$17.98 | $8.10 | -86.3 | $16.088 | 47.6% |
| PEN | 23/08/2024 | 0.0900 | – 8.05% |
$0.15 | $0.08 | 30.0 | $0.260 | 188.9% |
| PNX | 23/08/2024 | 0.0040 | 25.00% |
$0.01 | $0.00 | |||
| SLX | 23/08/2024 | 4.5700 | 0.75% |
$6.74 | $2.93 | $7.600 | 66.3% |
|
| TOE | 23/08/2024 | 0.2500 | -17.24% |
$0.70 | $0.01 | |||
| WCN | 23/08/2024 | 0.0100 | -33.33% |
$0.02 | $0.01 |
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