Nyrstar or stop?
Nyrstar has launched its capital increase from 490 million euros, the largest operation carried out on Euronext Brussels since a long time.
For No. 1 zinc (8.6% of world production), there is no real suspense. Whatever the level of shareholder participation, it is guaranteed to receive the funds referred . The banks that arrange the transaction actually guarantee the right end.
In the syndicate are: Goldman Sachs , Fortis Bank, ING, KBC Securities and Deutsche 
be remembered the latter has made a plea for zinc in one of his studies , no later than a few weeks ago.
We prefer to believe that this is a simple random schedule and that "Chinese walls" are not chewed paper in the German bank.
Whether or not to participate in this capital increase? all depends, of course, your financial situation and profile of your portfolio.
To help you in your decision, here's what think ING (also member of the syndicate) Nyrstar in a study published Monday 28 February. At the end of this article you will find a table with recent recommendations from financial analysts.
Overall, Filip De Pauw, ING analyst is positive on the stock. By integrating upstream mining of zinc ore, he expects for 2011 an increase of 65% of EBITDA (cash flow EBITDA). Until now, Nyrstar produces 31% of its ore requirements. His ambition is to increase to 50% over the medium term.
Here are some positive points raised by ING:
-> Thanks the cash cost, integration upstream of 50% should be a reality end of 2012.
-> Ebitda is expected to more than double by 2012 . In terms of mining, he should spend 24 million euros in 2010 to 190 million in 2011.
-> For ING, zinc prices should remain stable in 2011 and 2012 . Until 2014, production is expected to exceed consumption. In the medium and long term, however, zinc prices could climb.
The price per ton of zinc since 2005:
(Source: LME)
-> The value of Nyrstar is lower than its competitors . Currently the share is trading at 8.6 times estimated earnings per share in 2011 and 5.9 times that of 2012. To his peers, the average is 9.1 times in 2011 and 8.6 times in 2012.
Filip De Pauw identifies two key risks:
-> Mining in itself.
-> The price of zinc. It is estimated that each variation of 100 dollars per ton has an impact of 25 million euros on EBITDA.
In conclusion, it remains to purchase on the value but, due to the issuance of new shares has reduced its price target to 12 euros 13 euros before cons.
All analysts who have spoken since the announcement of the capital increase are positive action. The Deutsche Bank is even a target price of 17.8 euros. Seems it stays true to his passion on zinc ...
| Broker Recommendation Target Price | ||
|---|---|---|
| ABN Amro | Buy | 10.89 euros |
| Bank Degroof | Earn | 10.89 euros |
| Deutsche Bank | Buy | 17.8 euros |
| Exane | Outperform | 11.73 euros |
| Goldman Sachs | Buy | 11.8 euros |
| HSBC | Overweight | 11.66 euros |
| Macquarie | Outperform | 13 euros |
(Source: Bloomberg)
Also read: Nyrstar money for zinc
Stéphane Wuille
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