First Berlin Equity Research has published a research update on Deutsche Rohstoff AG (ISIN: DE000A0XYG76). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 50.00 to EUR 47.00.

Abstract
New wells helped DRAG post record sales and EBITDA numbers in Q3/23. While we expect 2023 investment of €182m to exceed the sum of CAPEX for the previous three years, we forecast that strong cashflows and profits will limit the rise in 2023 year-end net gearing to a manageable 58.8% (2022: 33.0%). On the basis of management’s 2024 CAPEX guidance of €50m (subject to upward revision if commodity prices remain firm) and current futures strips, we expect volume and EBITDA to climb by 7.5% and 6.0% respectively next year, but net gearing to fall to 16.6%. We maintain our Buy recommendation but have reduced the price target from €50.0 to €47.0 to reflect a 6% decline in the average level of the January 2024 to December 2028 oil futures strip since our last update of 25 October.