FREE Stock in Focus: Oceana Gold Philippines (OGP) – 24 May 2024 by AP Securities

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Summary of Broker’s Recommendation

We already assumed that copper prices would maintain above $9,000/mt for our OGP estimates, which means that our Target Price of P11.15 already priced in elevated copper prices. As such, we would be a Sell for OGP as its last traded price of P14.18 is above our Target Price.

Analysis and Opinion

Copper rally accelerates above $10k

Copper has gained 6.6% since last week, closing at $10,859/mt on the London Metal Exchange yesterday. This brings copper’s YTD gains to almost 27%, as supply from mines has been lower than expected due to slower ramp-up of a number of projects, and the closure of a major copper mine in Panama late last year. The US and its allies have also banned the trading of Russian metals, including copper, on the London and Chicago metal markets, further increasing supply-side pressures.

However, its recent close has snapped copper’s five-day winning streak and it’s highly probable that this last leg of the rally past $10k is more fueled by short squeeze rather than fundamental demand-supply factors.

OGP rides the copper hype

Newly-listed OGP rode the surge in copper prices, with OGP jumping 6.3% above its IPO price of P13.34. AT has seen its copper revenues grow by a CAGR of almost 3% since 2012 and produced 84.1-Mn lbs of copper in 2023, while OGP, on the other hand, has recently ramped up its copper production to around 30.0-Mn lbs per year.

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