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 51.00 to EUR 48.00.

Abstract
Oil accounted for 58% of DRAG’s volume in H1/24 and 87% of its revenue. Since our most recent note of 2 August the average levels of the Q4/24 and FY/25 oil futures strips have fallen by 10% and 9% respectively. DRAG has been guiding towards investment of €100m-€110m for 2025 (2024: €145-€165m) since April. Our recent discussions with management indicate that the €100m-€110m investment plan for 2025 remains in place at the current oil price. DRAG have stated that this money will be invested mainly in 11 Niobrara wells in Wyoming. We continue to model annual investment of €100m-€110m for the two years after 2025, but now forecast volume increases of 3.6% in 2026 and 2.9% in 2027 (previously: -0.9% and +0.9%) as the rate of decline in existing production eases. On the basis of current commodity futures strips, a very strong execution record (production has more than doubled since 2021), and an ample reserves base, we expect DRAG to continue to show stable to growing profits. After reworking our forecasts, we see EBITDA averaging €150m during the three-year period 2025-2027, corresponding to an EV/EBITDA ratio of only 1.9x. By comparison, EBITDA averaged €132m during 2021-24. We now see fair value for the DRAG share at €48 (previously: €51). We maintain our Buy recommendation.