JSC Kazatomprom released its financial report for Q1 2025. Revenue declined due to a shifted delivery schedule and a lower selling price. Against this backdrop, operating margin also fell. However, the company demonstrated strong growth in free cash flow. In our valuation model, we improved the cash position and slightly raised the uranium price forecast and the cost of capital. As a result, our valuation of Kazatomprom’s shares increased to 25,000 KZT, implying an upside potential of 22% from the current KASE price. Recommendation — “Buy”.
(=) Revenue declined due to a shifted schedule. The company’s Q1 revenue amounted to 214 bln KZT, down 21% YoY. The main reason was the absence of uranium product sales this year, while last year this item contributed 49 bln KZT. Revenue from natural uranium also declined by 7.8% YoY due to a 7% drop in consolidated sales volumes and a 13% YoY decline in the average USD selling price. At the same time, total uranium production rose by 11% YoY. A stronger USD partially offset the decline in tengedenominated revenue.
(=) Margin decreased amid weak revenue. Compared to last year, gross margin declined from 37.5% to 35.7%, driven by revenue falling faster than cost of sales. The EBITDA margin fell more ignificantly — from 46.6% to 35.5% — mainly due to a 76% YoY drop in net income from associates and joint ventures. Adjusted net income attributable to shareholders amounted to 25.7 bln KZT (–35% YoY), or 99 KZT per share. The decline was also due to a 130% YoY increase in negative FX differences amid a stronger tenge in Q1.
Our opinion and valuation model changes. Kazatomprom’s report can be seen as neutral: shifted uranium sales and a lower selling price led to a decline in revenue and margins compared to 2024. On the other hand, we highlight a 48% YoY increase in free cash flow — driven by deferred payments from clients for Q4. In the valuation model, we improved the cash position and slightly increased the uranium price forecast for 2025 and the WACC. As a result, our target price for Kazatomprom shares stands at 25,000 KZT, with 22% upside from the current market price. Recommendation — “Buy".