First Berlin Equity Research has published a research update on Deutsche Rohstoff AG (ISIN: DE000A0XYG76). Analyst Simon Scholes reiterated his BUY rating and increased the price target from EUR 40.00 to EUR 44.00.
H1/23 sales came in at €75.1m (H1/22: €72.2m) while EBITDA was €56.0m (H1/22: €64.0m). H1/23 EBITDA was down on the prior year period because a 12.8% volume increase and an improved hedging result (€1.3m vs €-26.8m) could not fully compensate for lower commodity prices (oil -26.5%, gas -60%). Other operating income was also lower (€3.8m vs. €9.4m) due mainly to lower gains on securities. Management has maintained FY/23 guidance given with the annual report in April for sales of €150-€170m and EBITDA of €115-€130m. The guidance is based on new wells which are expected to raise H2/23 production ca. 20% above the H1/23 level. 2024 sales and EBITDA guidance of €170m-€190m and €130-€145m is also unchanged. 2024 guidance is also based primarily on increased volume (+10-15%) as DRAG’s commodity price assumptions (oil: USD75/barrel; gas USD3.00/MMBtu) are the same for both 2023 and 2024. DRAG’s guidance and our forecasts imply that 2024 EBITDA will either exceed or near the record 2022 level of €139m. At the same time we expect cashflow and net profits to be strong enough to halve net gearing from the end June 2023 level of 50% to 26% by end 2024. We maintain our Buy recommendation and have raised our price target to €44 (previously: €40) on the basis of higher forecasts which reflect a rise in the average level of the oil futures strip (+USD10 for H2/23 and +USD5.90 for January 2024 – December 2028) since our last note of 4 May.