Citi sees earnings upside for Deterra Royalties

Deterra Royalties

13/04/2022 21:12

** Citi upgrades Australian mining royalty firm Deterra
Royalties's  DRR.AX  earnings per share and dividend estimates
as the brokerage sees reduced iron ore surpluses in CY22/CY23
amidst the ongoing Russia-Ukraine conflict
    ** Expects 2022 Chinese crude steel output to decline ~2.5%
y/y; iron ore supply from Australia and South Africa to be flat
y/y and from Brazil to increase 5% y/y 
    ** Raises DRR FY23 and FY24 EPS estimates by 33% and 16%,
respectively 
    ** Forecasts discounted cash flow to jump 3% to A$4.0 from
A$3.9 per share 
    ** Citi increases benchmark iron ore price forecasts for
CY22 by 9% and for CY23 by 38% to US$149 and US$110,
respectively 
    ** Sees Ukrainian iron ore exports falling by 50% due to
damage to infrastructure and expects Russian iron ore exports to
slip by 30% on logistical and transportation constraints
    ** Brokerage upgrades DRR's price target to A$5.10 from
A$4.65 and keeps 'neutral' rating 
    ** Four of 11 analysts covering the stock rate it "buy" or
higher, and seven "hold"; their median PT being A$4.90 –
Refinitiv data
    ** Stock up 10.9% this year, as of last close, vs a 0.5%
increase in the S&P/ASX 200 index  .AXJO  

 (Reporting by Roushni Nair in Bengaluru;)
 ((Roushni.Nair@thomsonreuters.com;))