Kazatomprom released its 1H 2025 financial results. Revenue declined due to a shifted delivery schedule, while the fall in realized uranium prices in USD terms was offset by a stronger FX rate. We note a significant improvement in margins and higher adjusted net profit. In our valuation model, we raised the exchange rate, increased the forecast uranium oxide price, and lowered the cost of equity. As a result, our target price per Kazatomprom share rose to 29,000 KZT, implying 20% upside from the current KASE price. Recommendation — Buy.
(=) Revenue declined due to a shifted schedule. Revenue for 1H 2025 amounted to 660 billion KZT, down 5.8% YoY. The main reason was the absence of uranium product sales this year, compared to 53.5 billion KZT in the same period last year. Natural uranium revenue decreased 1.1% YoY, as the 12% drop in average realized uranium prices in USD was offset by a 14% increase in the average USD/KZT rate. Overall uranium production rose 13% YoY.
(+) Noticeable margin improvement. Gross margin expanded from 36.8% to 43.4% YoY, mainly due to a 26% YoY decline in raw material and supply costs. EBITDA margin also increased from 52.1% to 55.6%, despite a 29% YoY drop in net income from associates and JVs. Adjusted net profit attributable to shareholders reached 202 billion KZT, or 779 KZT per share. Reported net income fell 58% YoY, but this was due to a one-off gain from business acquisition in 2024. Excluding this, net profit rose 8.8% YoY.
Our opinion and valuation model changes. We assess Kazatomprom’s report as moderately positive. Despite a slight revenue decline driven by the absence of uranium product sales and lower USD uranium prices, margins improved significantly. We also highlight a strong 69% YoY increase in free cash flow in 1H 2025. In our valuation model, we factored in a higher USD/KZT rate, which boosted the tenge-denominated price. We also slightly raised our forecast uranium oxide price, supported by positive trends in the nuclear energy market. Moreover, WACC declined due to reduced investment risk since our last review. As a result, our updated target price for Kazatomprom shares is 29,000 KZT, implying 20% upside from the current market price. Recommendation — Buy.