Boliden (Buy, TP: SEK350.00) - Benefiting from diversification
We reiterate our BUY but have cut our target price to SEK350 (400) after lowering our 2021–2022e adj. EBIT by 5–12% to reflect marked-to-market metal prices and FX. We are 1% below consensus on Q3 adj. EBIT, and believe increased sick leave and Covid-19 restrictions could limit production in the open-pit mines. Our copper production forecast is 11% below consensus. We still like the long-term story, with a higher smelting earnings base from operational improvements and recovering external smelting factors, such as spot TCs, which should warrant a higher relative valuation versus dedicated peers.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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