Rana Gruber (Buy, TP: NOK50.00) - Strategic projects on track
Adjusted Q3 EPS was NOK1.5, ~20% below our estimate of NOK1.9, while the effective iron ore price was USD76/t, ~4% below our estimate of USD79/t. We have cut our 2023–2024e by 13–25% on a 3–5% decline (December 2024 now at USD74/t) in the iron ore futures curve and 3% USDNOK appreciation. With an attractive iron ore hedging portfolio (240k tonnes hedged at USD138–145/t) for H1 2023, and the Fe65 upgrade set to be completed by year-end 2024, we believe Rana Gruber is attractively valued at a 2023e EV/EBITDA of 4.0x. We reiterate our BUY and NOK50 target price.
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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