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Berenberg lowers price target on Kenmare Resources following Q3 update
16th Oct 2019 13:17
(Sharecast News) - Over at Berenberg, analysts cut their price target on Irish mining company Kenmare Resources from 400p to 380p on Wednesday following the group's third-quarter results a day earlier.
Berenberg felt that operationally, Kenmare's Moma mine in Mozambique had performed from in line to slightly better than its own third-quarter estimates, with the project on track to meet production and cost guidance for the year.
The German broker also pointed out that excavated ore of 9.2 megatonnes was in line with its estimate and highlighted that grades were, in fact, "a little better than" its 3.4% heavy mineral at 3.63%.
Heavy mineral concentrate production of 304 kilotonnes was in line with forecasts, as was ilmenite production at 231kt and primary zircon production of 12.9kt also beat its 11.3kt estimates. Concentrates and rutile production also came in above estimates.
Berenberg said all this was "encouraging"; However, the broker highlighted the fact that total shipments of 193kt had missed its 322kt estimate as a result of poor weather conditions.
"While the company expects to ship +1mt in 2019, it does require a strong Q4," said Berenberg, which noted that a 35kt shipment had slipped into the final quarter at the end of Q3.
"We adjust our model to reflect the quarter, and also build in some conservatism in i) our FY 2019 shipments and ii) our zircon prices for the remainder of FY 2019 and FY 2020. This results in a reduction to our FY 2019 and FY 2020 EPS and our price target to GBp380," concluded Berenberg, which nevertheless maintained its 'buy' recommendation on Kenmare, telling clients the shares still offered "compelling value".
Berenberg felt that operationally, Kenmare's Moma mine in Mozambique had performed from in line to slightly better than its own third-quarter estimates, with the project on track to meet production and cost guidance for the year.
The German broker also pointed out that excavated ore of 9.2 megatonnes was in line with its estimate and highlighted that grades were, in fact, "a little better than" its 3.4% heavy mineral at 3.63%.
Heavy mineral concentrate production of 304 kilotonnes was in line with forecasts, as was ilmenite production at 231kt and primary zircon production of 12.9kt also beat its 11.3kt estimates. Concentrates and rutile production also came in above estimates.
Berenberg said all this was "encouraging"; However, the broker highlighted the fact that total shipments of 193kt had missed its 322kt estimate as a result of poor weather conditions.
"While the company expects to ship +1mt in 2019, it does require a strong Q4," said Berenberg, which noted that a 35kt shipment had slipped into the final quarter at the end of Q3.
"We adjust our model to reflect the quarter, and also build in some conservatism in i) our FY 2019 shipments and ii) our zircon prices for the remainder of FY 2019 and FY 2020. This results in a reduction to our FY 2019 and FY 2020 EPS and our price target to GBp380," concluded Berenberg, which nevertheless maintained its 'buy' recommendation on Kenmare, telling clients the shares still offered "compelling value".