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1. Company Snapshot

1.a. Company Description

KGHM Polska Miedz S.A. mines, produces, and sells copper, precious metals, and non-ferrous metals in Poland and internationally.It offers copper cathodes, wire rods, Cu-Ofe and Cu-Ag wires, and granule products; silver in bullion bar and granule forms; gold bars; molybdenum; ammonium perrhenate, metallic rhenium, and rhenium powder; and lead, sulphuric acid, copper and nickel sulphate, and selenium products, as well as platinum, palladium, and rock salt.The company was founded in 1961 and is headquartered in Lubin, Poland.

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1.b. Last Insights on KGH

KGHM Polska Miedz S.A.'s recent momentum may be attributed to shifting market sentiment, driven by a relatively quiet stretch with no major headlines. The company's steady valuation could signal a deeper story unfolding. With no obvious catalyst, investors may revisit their thesis on the stock. Long-term growth and profitability trends remain solid, but what drives current sentiment? The company's recent price movements raised fresh questions about its next chapter. Investors weigh their next move, debating whether now is the time to invest.

1.c. Company Highlights

2. KGHM's Q3 Results: Stable Production, Challenging Market Conditions

KGHM Group's 9-month 2025 financial results showed a mixed performance, with revenues 1% lower year-on-year due to maintenance at the Glogow electro-refining facility. However, the company's adjusted EBITDA increased by 16% year-on-year, driven by cost discipline and strong contributions from Sierra Gorda, KGHM Polska Miedz, and KGHM International. The company's EPS came in at 2.17, below analyst estimates of 5.57. The P/E Ratio of 15.91 suggests that the stock is fairly valued, while the EV/EBITDA ratio of 6.77 indicates a relatively low valuation compared to its earnings.

Publication Date: Nov -19

📋 Highlights
  • Stable Copper Prices with Currency Impact: Copper prices in PLN terms remained stable ($9,556 avg), but a 4% PLN depreciation offset a 5% USD increase, affecting net profit.
  • Production Mix and Efficiency Gains: KGHM Polska Miedz produced 421,000 tonnes of copper (-20,000 tonnes due to maintenance), while Sierra Gorda increased payable copper by 14% to 64,900 tonnes, with molybdenum up 100% YoY.
  • Cost Reduction and EBITDA Growth: C1 unit costs fell 6% globally, with KGHM International’s C1 costs dropping 40% and Sierra Gorda’s by 50%, boosting Q3 EBITDA 16% YoY.
  • Investment Progress and Energy Transition: PLN 3.8 billion in development initiatives (63% complete), including PLN 2.492 billion in mining investments. Renewable energy purchases reduced Scope 2 emissions by 5%.
  • Debt Management and Capital Allocation: Strong cash flow with PLN 358 million allocated for metallurgy modernization. Bonds to be issued in December to refinance debt, with $500 million earmarked for Sierra Gorda.

Production Highlights

Production-wise, KGHM Polska Miedz S.A. produced 421,000 tonnes of electrolytic copper, down 20,000 tonnes due to maintenance at Glogow smelter. Sierra Gorda's payable copper production increased by 14% year-on-year to 64,900 tonnes, while molybdenum production almost doubled. KGHM International's payable copper production was down 11% year-on-year to 40,600 tonnes.

Investment and Development

The company is making significant investments in its development initiatives, with a PLN 3.8 billion investment plan, of which 63% is already complete. Mining investments totaled PLN 2.492 billion, with a focus on mine dewatering, replacement of machine parks, and development of the Zelazny Most tailings storage facility. As management noted, "we are optimizing our international assets, including Sierra Gorda, to improve financial efficiency."

Cost Control and Efficiency

KGHM has made progress in cost control, with C1 unit costs decreasing by 6% and KGHM International's C1 costs dropping by almost 40%. Sierra Gorda's C1 costs decreased by almost 50%. The company is also working to reduce its Scope 2 emissions, having purchased 110-megawatt hours from wind farms.

Financial Condition and Outlook

The company's financial condition remains strong, with $240 million in payments from guarantees, loans, and services. KGHM plans to issue bonds in December to refinance existing debt and prolong refinancing terms. With a Net Debt / EBITDA ratio of 0.85, the company's debt levels appear manageable. Analysts estimate revenue growth of 9.6% for next year, which could potentially drive the stock higher.

3. NewsRoom

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Abacus Provides Corporate Update

Dec -01

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Why The Narrative Around KGHM Polska Miedz Is Shifting Amid Analyst Upgrades and Fresh Insights

Nov -30

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How Recent Analyst Updates Are Shaping the KGHM Investment Story

Nov -16

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Why Analysts See KGHM’s Story Shifting Amid Upgraded Forecasts and Ongoing Risks

Nov -01

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Societe Generale: shares & voting rights as of 31 August 2025

Sep -09

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Assessing Acciona (BME:ANA)'s Valuation After Recent Subtle Moves

Sep -09

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Deutsche Bank (XTRA:DBK): Assessing Valuation After a Period of Quiet Share Price Momentum

Sep -09

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Is Vaisala (HLSE:VAIAS) Undervalued? A Fresh Look at Its Current Valuation

Sep -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.92%)

6. Segments

KGHM Polska Miedz S.A.

Expected Growth: 4.5%

KGHM Polska Miedz S.A.'s 4.5% growth is driven by increasing copper prices, strong demand from electric vehicle and renewable energy sectors, and the company's cost-cutting initiatives. Additionally, the Polish government's support for the mining industry and KGHM's diversified revenue streams from other metals such as silver and gold also contribute to its growth.

Sierra Gorda S.C.M.

Expected Growth: 3.8%

Sierra Gorda's 3.8% growth is driven by increasing copper prices, improved operational efficiency, and higher production volumes. The mine's low-cost profile and KGHM's strategic investments in exploration and development also contribute to its growth. Additionally, the Chilean government's support for the mining industry and favorable demand trends in the copper market further boost Sierra Gorda's performance.

Consolidated Eliminations

Expected Growth: 0.0%

KGHM Polska Miedz S.A.'s Consolidated Eliminations growth rate of 0.0% is driven by stagnant copper prices, flat production volumes, and stable cost structures. The lack of growth is also attributed to the absence of significant acquisitions or divestitures, and a stable capital structure.

KGHM International LTD.

Expected Growth: 4.2%

KGHM International LTD's 4.2% growth is driven by increasing copper prices, robust demand from electric vehicle and renewable energy sectors, and the company's successful cost reduction initiatives. Additionally, the company's focus on operational efficiency, exploration and development of new projects, and strategic acquisitions have contributed to its growth momentum.

Other

Expected Growth: 3.5%

KGHM Polska Miedz S.A.'s 3.5% growth is driven by increasing copper prices, rising demand from electric vehicle manufacturers, and growing production volumes at its Polish mines. Additionally, the company's cost-cutting initiatives and investments in digitalization have improved operational efficiency, contributing to its growth momentum.

7. Detailed Products

Copper

KGHM Polska Miedz S.A. is one of the largest copper producers in the world, offering high-quality copper cathodes and copper wire rods for various industrial applications.

Silver

KGHM Polska Miedz S.A. produces high-purity silver, used in various industries such as jewelry, coins, electronics, and solar panels.

Gold

KGHM Polska Miedz S.A. produces gold, used in jewelry, coins, and other industrial applications.

Lead

KGHM Polska Miedz S.A. produces lead, used in batteries, radiation shielding, and other industrial applications.

Zinc

KGHM Polska Miedz S.A. produces zinc, used in galvanizing, die-casting, and other industrial applications.

Sulphuric Acid

KGHM Polska Miedz S.A. produces sulphuric acid, used in the production of fertilizers, detergents, and other chemicals.

Copper Ore

KGHM Polska Miedz S.A. extracts and processes copper ore, which is used to produce copper and other metals.

Recycling Services

KGHM Polska Miedz S.A. offers recycling services for copper and other non-ferrous metals.

8. KGHM Polska Miedz S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

KGHM Polska Miedz S.A. operates in the copper and silver mining industry, which has a moderate threat of substitutes. While there are alternative materials that can be used in place of copper, such as aluminum or fiber optics, copper remains a widely used and essential material in many industries.

Bargaining Power Of Customers

KGHM Polska Miedz S.A. has a diverse customer base, including companies from the electrical, construction, and industrial sectors. However, the company's customers do not have significant bargaining power due to the lack of concentration in the customer base.

Bargaining Power Of Suppliers

KGHM Polska Miedz S.A. relies on suppliers for equipment, materials, and services. While the company has some bargaining power due to its large scale of operations, suppliers also have some bargaining power due to the specialized nature of the equipment and services required.

Threat Of New Entrants

The copper and silver mining industry has significant barriers to entry, including high capital costs, regulatory hurdles, and environmental concerns. These barriers make it difficult for new entrants to enter the market, reducing the threat of new entrants.

Intensity Of Rivalry

The copper and silver mining industry is highly competitive, with several large players competing for market share. KGHM Polska Miedz S.A. faces intense competition from other major mining companies, which can lead to downward pressure on prices and profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 22.03%
Debt Cost 3.95%
Equity Weight 77.97%
Equity Cost 11.29%
WACC 9.67%
Leverage 28.25%

11. Quality Control: KGHM Polska Miedz S.A. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Aurubis

A-Score: 5.9/10

Value: 9.6

Growth: 5.2

Quality: 4.2

Yield: 3.1

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
SOL

A-Score: 5.3/10

Value: 2.2

Growth: 7.3

Quality: 4.9

Yield: 0.6

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Arkema

A-Score: 4.7/10

Value: 7.3

Growth: 3.4

Quality: 3.2

Yield: 7.5

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Holmen

A-Score: 4.6/10

Value: 4.1

Growth: 4.6

Quality: 6.2

Yield: 3.1

Momentum: 1.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
KGHM Polska Miedz

A-Score: 4.5/10

Value: 7.4

Growth: 4.2

Quality: 4.6

Yield: 1.2

Momentum: 5.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Clariant

A-Score: 4.3/10

Value: 6.3

Growth: 3.7

Quality: 3.1

Yield: 6.9

Momentum: 0.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

235.0$

Current Price

235$

Potential

-0.00%

Expected Cash-Flows