Petropavlovsk PLC is a London-listed mining and exploration company with its principal assets located in Russia where it is one of the leading gold producers. Petropavlovsk has a 65.6% holding in IRC limited, a Hong Kong-listed developer and producer of industrial commodities in the Russian Far East, close to the border with China. The security has finished its rebound and should now start a bearish trend.

From a fundamental viewpoint, the company has not a lot of qualities with reduced business predictability and high leverage ratio: this does not argue for investor interest. Indeed, its EV/Sales ratio is at 1.74x. From now on, Thomson Reuters consensus expects a GBp 1.23 EPS for the current year and a GBp 1.90 EPS for the next year. On this basis, the security is currently trading respectively 4.18 and 3.46 times its sales.

A new decline in prices is likely to happen because of the technical configuration. Prices are under the 20-day moving average at GBp 430.8 and this stop any possible bullish impetus. Moreover, the security is close to a significant support area at GBp 437.4 and this reinforces the trading strategy.

This context suggests a short position in Petropavlovsk PLC in order to target a return toward the GBp 380.9 support area in a first time and then GBp 361.7. A stop loss will be fixed above the GBp 437.4 resistance.