Boliden (Buy, TP: SEK305.00) - Good value to warrant re-rating
We reiterate our BUY and SEK305 target price, reflecting marked-to-market metal prices and FX. Following higher than expected capex guidance for 2021 and lower operational guidance, we keep our 2020–2021e adj. EBIT virtually unchanged. Nonetheless, we believe Boliden offers good value as we expect strong Q4 cash flow to lead to a total dividend of SEK13 (yield: 5%), which we believe could warrant a re-rating of the stock from its 20% discount to its historical P/E on our 2021e EPS.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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