Edison Investment Research Limited
London, UK, 17 December 2021
Gemfields Group (GML): Coloured gemstones' time to sparkle and shine
Record Q4 emerald and ruby auctions, which generated US$37.8m and US$88.4m respectively, took Gemfields' total gemstone auction sales for 2021 to US$239.6m, an all-time high that exceeds the 2019 total of US$200.6m. The results indicate a strong market for coloured gemstones. Gemfields provides investors with unique exposure to this subsector and we have updated our forecasts to reflect stronger gemstone prices.
Updating our discounted cash flow (DCF) modelling for stronger pricing, we now calculate a DCF sum of the parts (at a 10% discount rate) of US$502m (previously US$367m). Within that, Kagem's attributable valuation has increased by 42% to US$256m and MRM's valuation by 19% to US$362m. Despite Gemfields' share price having increased by more than 100% this year, our valuation implies further upside potential.
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