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Boliden (Buy, TP: SEK580.00) - A new normal We reiterate our BUY and have lifted our target price to SEK580 (500), having raised our 2022–2023e EBITDA by 18% to reflect marked-to-market metal prices and FX. Given exceptionally favourable trading conditio

Boliden (BOL SS, Buy) - A new normal We reiterate our BUY and have lifted our target price to SEK580 (500), having raised our 2022–2023e EBITDA by 18% to reflect marked-to-market metal prices and FX. Given exceptionally favourable trading conditions, we see record-strong Q1 earnings. More importantly, thanks to good demand trends and significant cost inflation hitting the industry to a much greater extent than Boliden, we believe the pricing of Boliden’s key metals should remain elevated. Thus, we consider it offers attractive valuation multiples and dividend yields. Record-strong Q1e (due at 07:45 CET on 28 April). Due to pre-announced operational issues at the Tara mine, alongside Covid impacts on key mines and relatively low copper grades at Aitik and Kevitsa, we forecast temporarily low mining volumes. However, given exceptionally favourable pricing, we expect record-strong Q1 results. We estimate reported EBIT of SEK5.5bn (SEK2.8bn in Q1 2021). Impressive 2022–2023e EBITDA. In addition to the electrification theme supporting demand for copper and nickel, structurally higher prices for electricity and CO2 are bolstering the zinc price (high energy-intensity). Thus, we believe the favourable pricing environment should continue in 2022–2025, while Boliden looks set to benefit from relatively cheap electricity supply agreements. Multiples expansion. Adjusting for the expected cash total distribution, the stock is trading at a 2022–2023e P/E of 7–6.5x (10-year average c12x). Given our expectations of better long-term mining volumes and incremental earnings from the Odda expansion, its world-class sustainability, and an appealing price outlook, Boliden looks poised for a further re-rating BUY reiterated and target price raised to SEK580, implying c20% upside potential. Our target price is based on a 10% discount to our SOTP of SEK650/share and a 2025e P/E of c9.4x, which includes SEK1.2bn of incremental EBIT from the EUR700m Odda expansion. (20 pages)