Berenberg cuts Boliden as softer base metals weigh

Boliden AB

19/05/2023 10:46

** Berenberg downgrades Swedish copper miner Boliden
 BOL.ST  to "hold" from "buy" citing softer economic environment
weighing on base metals, and limited free cash flow generation
in Q2
    ** The broker favours precious metals, expecting that base
metals sentiment will remain fairly subdued, at least in Q2,
before short-term upside comes from China and longer-term from
energy transition-linked metal demand 
    ** It predicts negative free cash flow of SEK 2.5 billion in
Q2, with the company moving to a net debt position in 2023
    ** According to the brokerage, more attractive opportunities
exist for investors seeking base metals exposure, e.g., Central
Asia Metals  CAML.L  ("buy"), although the UK-based company has
a smaller market cap than Boliden
    ** It cuts target price by 23% to SEK 360 citing an
adjustment from a premium multiple of 6.5x to 5x EBITDA, and
some conservatism on costs 
    ** However, Berenberg likes the Boliden's longer-term story,
calling it a "top-quality" stock with favourable commodity
exposure, solid balance sheet
    ** Out of 21 analysts that cover Boliden, three rate it
"strong buy" or "buy", 11 rate it "hold", and seven rate it
"strong sell" or "sell"

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))