TGS – UBS rates the stock as Downgrade to Neutral from Buy
The company will acquire the remaining 40% interest in the Kipoi mine in the DRC for US$111m. To fund the deal the company needs to conduct a placement, an underwritten entitlement offer and enter a bridging finance facility. This means a material amount of high cost, short-term debt.
The stock remains cheap relative to the broker’s valuation but UBS is downgrading to Neutral from Buy, based on the increased risks. Target is lowered to 36c from 58c.
Target price is $0.36.Current Price is $0.30. Difference: $0.06 – (brackets indicate current price is over target). If TGS meets the UBS target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).