Rana Gruber (Buy, TP: NOK90.00) - Volatile iron ore prices

Rana Gruber reported a mixed set of Q1 results, with accounting and hedging effects as well as volatile iron ore prices, which blurred much of the underlying operational result. We have lowered our 2024–2026e EPS by 1–3% on the results and our updated forecasts for the latest iron ore futures curve and FX changes. We continue to find a 2024e P/E of 7x on current spot rates attractive, while we await the benefits of the company’s upgrade to Fe 65% and potential further upgrades longer-term. We re...

Rana Gruber (Buy, TP: NOK90.00) - Soft NOK offset soft iron ore prices

We estimate Q1 EBITDA of NOK142m for Rana Gruber in a quarter with falling iron ore prices. We have made small positive changes to our 2024–2026e EPS as a ~10% negative shift in the iron ore futures curve is more than offset by a ~10% depreciation in the NOK versus the USD. We continue to find a 2024e P/E of 7x on current spot rates attractive while we await the benefits from the company’s upgrade to Fe 65% and potential further upgrades on a longer time horizon. We reiterate our BUY and NOK90 t...

Rana Gruber (Buy, TP: NOK90.00) - Riding high on strong iron ore price...

Q4 adj. EPS of NOK6.1 was 19% above our estimate. The DPS for Q4 was NOK4.3, in line with the 70% payout policy and extending the run of quarterly distributions (Rana Gruber has paid out ~NOK32 in dividends since its IPO in 2021). While we have lowered our 2024–2025e EPS by 5–4% following the 2% decline in iron ore futures prices, we believe Rana Gruber is attractively valued at a 2024e P/E of ~6x and an implied dividend yield of ~11%. In addition, the company is set to benefit from its Fe65% up...

Rana Gruber (Buy, TP: NOK85.00) - Ending 2023 in style

We expect Q4 adj. EPS of NOK5.1 and a DPS of NOK3.6 (70% payout policy), marking the end to a solid year, with an accumulated dividend distribution of ~NOK11.7 (~15% yield at current share price). We have raised our 2024–2025e EPS by ~8–10% on an ~8% uplift in iron ore futures, partly offset by our increased fixed-cost estimates, mainly driven by higher payroll costs. We reiterate our BUY and NOK85 target price.

Rana Gruber (Buy, TP: NOK85.00) - On the front foot

The Q3 results were solid, and the capital markets update included confident messaging about ongoing strategic projects, particularly upgrading to 65% Fe content (Fe65) and increasing magnetite production. We reiterate our BUY and have raised our target price to NOK85 (75) on our c4% higher 2024–2025e EPS (given a c1% increase in the iron ore futures curve) and the positive outlooks for strategic projects.

Rana Gruber (Buy, TP: NOK75.00) - Waiting for Fe65 prices

We expect Q3 adj. EPS of NOK4.1, and a NOK2.8 DPS, corresponding to the 70% payout policy. We have raised our 2024–2025e EPS by c39–29% on 9–7% increases in the iron ore futures curve. We believe Rana Gruber looks attractive at current multiples, with an implied dividend yield of c11-12% for 2024–2025e (and c15% for 2023e). We reiterate our BUY and have raised our target price to NOK75 (70), reflecting our estimate increases and higher earnings from likely upcoming Fe65 prices.

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Rana Gruber (Buy, TP: NOK70.00) - Dividends set to hold firm

Although uncertainty is looming in the European and Chinese iron ore markets, futures still suggest Rana Gruber should continue to generate attractive earnings. Management remained firm that the company will be able to fund capex and dividend payments. Furthermore, it said the Fe65 project is progressing well. We have raised our 2024–2025e EPS by 25% on a 6% uplift in iron ore futures. We reiterate our BUY and NOK70 target price.

Rana Gruber (Buy, TP: NOK70.00) - Iron ore futures remain buoyant

We expect Q2 adj. EPS of NOK1.3 (results due at 07:00 CET on 29 August). Current iron ore futures suggest continued earnings support in 2024, and we note the company plans to complete its Fe65 project by the end of that year. The upgrade should boost earnings as Fe65 iron ore has historically achieved a premium of USD16/t versus 62% Fe. We have raised our 2024–2025e EPS by 10–21% on a 3–5% uplift in the iron ore futures curve, and reiterate our BUY and NOK70 target price.

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Rana Gruber (Buy, TP: NOK70.00) - Closing in on Fe65 prices

At the Q1 presentation, management gave firmer guidance on how it will upgrade to Fe65 (65% iron content in hematite products) and possibly to Fe67 at a later stage. With Fe65 prices set to take effect 12 months from now, we have incorporated this into our price scenarios in the valuation methodology and have raised our target price to NOK70 (65). We reiterate our BUY.

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Rana Gruber (Buy, TP: NOK65.00) - Volume boost in Q1e

We expect Q1 adj. EPS of NOK5.5 (results due at 07:00 CET on 11 May, driven by higher sales volumes than expected at 423k tonnes of hematite (versus our previous estimate of 365k tonnes) and an iron ore price of USD133/t (excluding freight), boosted by a USD8/t lag effect from Q4 as settled prices were higher versus booked prices. We have cut our 2024–2025e by ~27–30%, following a 12–14% decline in iron ore futures, and in turn our target price to NOK65 (70). We still see solid dividend capacity...

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Rana Gruber (Buy, TP: NOK70.00) - Dividends served

Q4 EBITDA of NOK168m fell 15% shy of our estimate, driven by a realised iron ore price of USD111/t, 8% below our estimate of USD120/t. Given the surge in iron ore prices at end-Q4, we consider the price deviation within a ‘normal’ range (depending on shipping timing effects). Our 2023–2024 EPS estimates are largely unchanged, and we consider Rana Gruber attractively valued at a 2023e EV/EBITDA of ~2.6x. We reiterate our BUY and have raised our target price to NOK70 (65) on a lower peer multiples...

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Rana Gruber (Buy, TP: NOK65.00) - Dividends back on the menu

We expect Q4 adj. EPS of NOK3.8 (results due at 07:00 CET on 15 February), driven by a rebound in iron ore spot prices to ~USD117/t in the quarter, having bottomed out at ~USD78/t earlier in Q4. We estimate an average Q4 iron ore price of USD116/t per shipment, excluding freight (USD120/t including lag effects from Q3). We have raised our 2023–2024e EPS by NOK8.2–7.5 after a ~50% increase in the iron ore futures curve, and in turn our target price to NOK65 (50). We reiterate our BUY.

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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 2023...

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