Koza Altin Isletmeleri AS (KOZAL) headed for its steepest slump on record on speculation the Turkish gold miner’s earnings will be hit as a two-day slide in the precious metal pushed it into bear market territory.
The shares tumbled 9.5 percent to 35.10 liras by 3:40 p.m. in Istanbul, set for the biggest drop since it first sold shares to the public in February 2010. About 2.6 million shares changed hands, more than 4 1/2 times the stock’s three-month average daily volume, according to data compiled by Bloomberg. Gold for immediate delivery fell 4.2 percent to $1,420.03 an ounce, bringing its back-to-back loss to 9.4 percent. The precious metal has lost 20 percent since it reached 1792.42 per ounce on Oct. 4.
“Koza generates 99 percent of its revenues through sales of extracted gold,” Bertan Ilbak, an analyst at Global Securities in Istanbul, said in e-mailed comments today. “Gold entered bear market territory just as Borsa Istanbul closed the week on Friday. Thus, investor reaction was delayed to today.”
A security is said to be in a bear market if it corrects by 20 percent or more in a given period.
Koza operates four gold mines in Turkey, with a fifth at the development stage, according to the company’s website. It reported 642.1 million liras ($369 million) of net income in 2012, up 39 percent from 460.5 million liras in the previous year.
Gold’s slump may hurt second-quarter revenues, Ilbak, who cut his recommendation for Koza to sell from hold on April 10, said. He is the only analyst among 21 tracked by Bloomberg that recommends investors sell Koza’s shares. Thirteen say buy and seven prefer to hold.
Koza Altin trades at eight times its estimated 12-month earnings, according to data compiled by Bloomberg. That compares with a 6.3 multiple for South Africa’s Harmony Gold Mining Co. Ltd. (HAR), 7.6 for Russia’s Polymetal International Plc (POLY) and 7.4 for China’s Zijin Mining Group Co. Ltd. (2899)
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