Is Now the Time to Buy Kazakhmys plc (KAZ)?

Kazakhmys appears cheap, but is now the time to buy?
Kazakhmys is one of the largest copper miners in the world. However, similar to its peers, Kazakhmys’ earnings are coming under pressure from falling commodity prices and rising costs.

Indeed, within Kazakhmys’ latest trading statement, the company reported that profits had fallen 70% during 2012.

Furthermore, because of falling profits, Kazakhmys plc (LON:KAZ) was forced to increase its borrowing to finance planned capital expenditure for the year. Loans increased by 30%, which pushed the company from a net cash position of $19 million to a net debt position of $800 million.

Finally, in addition to falling profits and rising debt, Kazakhmys is facing a potential multibillion-dollar writedown of its investment in Eurasian Natural Resources Corporation (LON:ENRC).

Kazakhmys holds 26% of ENRC, which was originally valued at $3.2 billion. However, because of ENRC’s falling share price, Kazakhmys’ investment is now worth only $1.5 billion, indicating that Kazakhmys is facing a potential $1.7 billion loss.

So with profits falling, debt increasing, and the risk of a large write-off, I believe now does not look to be a good time to buy Kazakhmys at 570 pence.

The article Is Now the Time to Buy Kazakhmys? originally appeared on Fool.com and is written by Rupert Hargreaves.

Fool contributor Rupert Hargreaves and The Motley Fool have no position in any of the stocks mentioned.

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