At the previous trading session, shares of GMK Norilsk Nickel rose by 2.03%, closing at 24,410 rubles. The paper outperformed the market, which lost 0.62%.
At the auction on Friday, shares of Norilsk Nickel broke above 24,200 rubles. Information on dividends and news about the launch of buyback became an important driver for the securities.
Norilsk Nickel’s board of directors cut dividends to 50% of FCF (1,021.22 rubles per share; dividend yield – 4.2%) and at the same time announced a buyback for $ 2 billion. About 87% of the repurchased shares are planned to be redeemed. The launch of the buyback is positive for the shares: due to it, shareholders can “get additional” due to the growth of quotations, the benefit that they lost due to the decrease in dividends.
Moreover, cancellation of securities will lead to an increase in earnings per share and, accordingly, future dividends. It is also worth noting that the share of buybacks in the average daily trading turnover over the past year may reach about 7.8%. This is a high indicator, which means that buyback can have a noticeable effect on quotes. The launch date for the program has not yet been announced, but it can be assumed that it will begin in the near future.
From a technical point of view, the shares came close to the level of 24,500 rubles., The breakdown of which will mean the breakdown of consolidation from the end of February and will allow us to expect the movement of securities towards the tops. Oscillators on the hourly and daily timeframes allow the rise to continue in the coming days. With a breakdown of 24,500 rubles. the next resistance may be 25,000 rubles. and 25,500 rubles.
In light of the launch of the buyback, medium-term expectations are moderately positive. Additional demand for shares should support the paper. With a calm external background, the rise in shares may continue.
- Resistances: 24500/25000/25500
- Supports: 24200/24000/23800/23000
The external background is mixed this morning. American indices rose after the close of our main session on Friday. Asian markets are trading mostly in negative territory today. Futures on the S&P 500 index are down 0.3%, Brent oil is up 0.1% and is near the $ 63 level. All this suggests that if the external background persists, the opening will take place near the previous day’s close.
Since 2009, Norilsk Nickel shares have been in a big up-trend. Growth impulses alternate with periods of sideways consolidation, drawdowns are quickly redeemed, indicating the strength of the trend.
Trend indicators on the weekly timeframe look up. The last correctional wave at the end of February was caused by the news about flooding of Norilsk Nickel mines. Due to the incident, the production plan for 2021 was reduced. However, the successful completion of the second phase of rebuilding work at the end of March and the confirmation of the production plan provoked a rebound. At the moment, the negative driver has already been largely incorporated into prices.
In the absence of negative news from the mines, the potential for recovery of the paper is quite impressive. The first target within the corrective rebound is RUB 24,500. If the mark is passed, the technical picture will improve, and the growth target will be 27,000 rubles.
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