Boliden (Buy, TP: SEK240.00) - Value story intact
We reiterate our BUY and have raised our target price to SEK240 (235), reflecting marked-to-market metal prices and FX. Even though Boliden kept its 2020 capex outlook and working capital build-up could hinder cash flows, we believe the value story is intact. Boliden is in our view one of the few companies in the sector with acceptable 2020e multiples and set to pay dividends; the stock is trading at a P/E of 9.7x and FCF yield of 6%. We have lifted our 2020–2021e EBIT by c5–8%.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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