Lundin Mining (Buy, TP: SEK98.00) - Dividend case activated
We reiterate our BUY but have cut our target price to SEK98 (105) and our 2021–2022e EBITDA by 9–4%, reflecting marked-to-market metal prices and lower production in Candelaria. Q2 EBITDA was 3% above consensus, and the report supported the dividend case as the company raised its regular DPS by 50% (again) and announced a semi-annual performance DPS of CAD0.18, for an annualised yield of 5%. However, guiding for lower production in Candelaria also in 2021–2022, the stock is facing earnings headwinds from lower production and Chilean taxation risks. With a 5% copper-equivalent volume CAGR and trading at a 2022e EV/EBITDA of 2.7x, we still find the valuation attractive.Lundin Mining is a holding company. Through its subsidiaries, Co. is engaged in the exploration for minerals and the production of base metals, with a focus on zinc.
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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