Norilsk Nickel Finally at Entry Point of Turnaround Story

Norilsk Nickel (OTCPK:NILSY, GMKN.ME) recently held its annual Investor Day. The company is the world's largest producer of palladium and high-grade nickel, as well as one of the largest producers of platinum and copper. The main message to shareholders was that the principal stages of the environmental program on the Kola Peninsula have been completed. The implementation of the Sulfur Project in Norilsk is in full swing. Capital expenditures will increase by more than 50% over the next year. Norilsk Nickel prioritizes its goal of a zero work mortality rate as the cornerstone of its strategic priorities. As the president of the company, Vladimir Potanin, stated, “our strategic goal is to bring Norilsk Nickel to the top league of the green economy of the future and become a leader in the field of sustainable development.

Norilsk Nickel raised its 2021-30 capital spending estimate by $6 billion to $35 billion to reflect higher construction costs and increased investment in energy infrastructure upgrades. Nornickel also increased its long-term strategic ambitions for metals production, aiming for 25%-35% growth in nickel volumes, 50%-60% in platinum group metals and 25%-35% in copper.

The company also targets to gain a substantial market share in the battery segment through supply agreements and deeper integration into the European battery value chain, including research and partnerships. Nornickel also recommends an interim dividend of $3.2 billion and its management expects to stick to its dividend policy with the final payment for 2021.

Norilsk Nickel boasts high dividends, unique commodity exposure and improved ESG at a low price. Although Norilsk Nickel shares have been underperforming, declining from Rub25,633 (around $361) in August 2021 to the current Rub22,056(around $297.73), its valuations with trailing P/E of approximately 6.4X and trailing P/S 2.6X, suggest the stock might be an irreplaceable addition to every private investment portfolio.