Boliden (Buy, TP: SEK235.00) - Capex outlook in focus
We are 10% below Q1 EBIT consensus (results due 12:30 CET on 28 April). We expect Boliden to provide an update on its 2020 capex outlook, which in our view will be the key focus. The likelihood of the company reducing its 2020 capex guidance has increased in our view, as any previous potential projects will likely be deferred as an effect of the Covid-19 crisis. Thus, the FCF and dividend outlook is still attractive in our view, despite having cut our 2020–2021e EBIT by 16–13% on marked-to-market metal prices and FX. We reiterate our BUY, but have cut our target price to SEK235 (270).Boliden AB produces base metals such as zinc, copper and lead for industrial customers throughout Europe. Co.'s operations are conducted within two business areas, namely Mines and Smelters. Co.'s mining operations comprise eight mines located in four areas: Aitik, the Boliden Area and Garpenberg in Sweden, and Tara in Ireland. Co.'s exploration focuses on deposits that contain zinc, copper and precious metals. Co.'s smelters comprise the Kokkola and Odda zinc smelters, the Ronnskar and Harjavalta copper smelters, and the Bergsoe lead smelter. Co.'s smelters, Ronnskar, Harjavalta, Kokkola, Odda and Bergsoe, produce pure metals, customized alloys, and by-products such as sulphuric acid.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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