[Overseas Stocks Spotlight] "Barrick Gold, Q2 Confirms Potential for EPS Growth"

[Asia Economy Reporter Eunmo Koo] Barrick Gold (GOLD US) confirmed the potential for an increase in earnings per share (EPS) with its Q2 results. Analysts expect the stock price to remain strong in the second half of the year, supported by rising gold prices, increased production, share buybacks, and the possibility of inclusion in the S&P 500 index if the company changes its primary listing to the New York Stock Exchange.

Barrick Gold's Q2 EPS (April to June) was $0.23, exceeding the consensus estimate of $0.18 by 28%. Due to the impact of COVID-19, the all-in sustaining cost (AISC) rose 8% from the previous quarter to $1,031, but the average selling price (ASP) of gold increased 9% to $1,725. Gold production in the first half (January to June) reached 2.4 million ounces, indicating no difficulty in achieving the annual guidance of 4.6 to 5 million ounces.

Gold prices are expected to rise further in September. KB Securities analyst Asim Hussein explained in a report on the 15th, “With the ongoing COVID-19 pandemic, the intensifying U.S. presidential election, global economic weakening, and U.S.-China trade tensions, further increases in gold prices are anticipated.” He added, “Given the expectations for stimulus measures and vaccine development progress, short-term volatility is expected to increase. Risk-averse investors are advised to closely monitor September, when U.S. election-related issues will become more prominent.”

Production in the second half is expected to increase compared to the first half. Hussein forecasted, “Despite lockdowns and tax disputes with Papua New Guinea, production in the second half will maintain the existing trend.” The Argentine mine (accounting for 7% of production) resumed operations in April, and the Dominican Republic mine (16% of production), which has completed maintenance, has also restarted operations. The company proposed a 57:43 revenue-sharing ratio to Papua New Guinea (7% of production), which is expected to resolve the dispute for now.

Shareholder-friendly policies are also expected to contribute to stock price gains. Barrick Gold is considering share buybacks and changing its primary listing from the Toronto Stock Exchange to the New York Stock Exchange. The company set its Q2 dividend at $0.08, a 14% increase. Hussein noted, “With $6.7 billion in liquidity and $3.7 billion in cash, and no debt due for repayment until 2033, if included in the S&P 500 index, passive fund buying is also expected.”