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.

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.