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Anglo Pacific target price hiked by RBC Capital Markets

Published: 08:58 01 Feb 2022 EST

cobalt

Anglo Pacific Group PLC's (LSE:APF, TSX:APY, OTC:AGPIF) share price target was lifted higher by RBC Capital Markets as its financial forecasts were updated to include the latest royalty income.

"We continue to have a high conviction in the Anglo Pacific story given strong commodity prices and the benefits of its royalty business model," said the broker, saying the appointment this week of Marc Bishop Lafleche as chief executive "removes the leadership uncertainty and gives the company the best chance in our view to continue with the current strategic path".

Re-iterating its 'outperform' rating, the target price was nudged up to 245p from 240p.

Last week the company reported its highest-ever royalty income, for the final three months of 2021, as cobalt and coking coal prices soared to new records.

RBC upped its royalty related income forecasts 2.8% to US$89.6mln, which drove its earnings per share (EPS) 3.4% higher to US$0.24 per share.

Increased volumes at Kestrel in the first quarter of 2022 to account for the deferral of volumes increases full-year 2022 royalty related income 1.5% and EPS by 3.3% to US0.24 per share too.

"We also update our LIORC dividend estimates to include the new numbers published by our Canadian team," the analysts said, which increased the NAV per share from 186p to 188p and led to the new target price.

The analysts said the company's portfolio commodity exposure "continues to fit well with long-term themes (especially once Kestrel rolls off) and with its pure commodity passthrough royalty structure there are no inflation concerns on the cost side, which is mounting elsewhere in the sector".

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