Boliden (Buy, TP: SEK460.00) - Industry’s pain is Boliden’s gain
The new European energy landscape looks to be fundamentally changing the zinc-smelting industry. Our calculations suggest payments per ton to a typical zinc smelter would have to rise by cUSD1,000 to cover cash costs. Unlike other European smelters, Boliden’s have access to relatively inexpensive CO2-free electricity and are buying most of their electricity on fixed multi-year price contracts. Reflecting better marked-to-market metal prices and FX, and a cSEK1bn earnings uplift from better zinc-smelting terms, we have raised our EBIT by 22% for 2023e and 2024e. We reiterate our BUY and have raised our target price to SEK460 (400).
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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