Befesa (1K) | Buy | Back to the value creation phase

Research evidence excerpt

Befesa (1K) | Buy | Back to the value creation phase

Befesa Buy | Target Price: EUR45.00

Estimates review

We have revised our model and refined our estimates, as we believe that the fundamental factors

influencing commodity prices remain favourable, providing a robust tailwind for the group.

However, the prevailing uncertainty in the macroeconomic environment outweighs the positive

momentum observed in zinc and aluminium prices. Consequently, we anticipate a favourable

impact on the group's results, driven by once again supportive treatment charges and overall

reduced energy costs, despite the fluctuations in metal prices. Enhancements will primarily

influence the outcomes in US operations.

We have made adjustments to some of our underlying parameters, maintaining consistency for

both the medium- to long-term and short-term forecasts. Our installed capacity remains

unchanged, as the group has indicated that the development in China has been halted, with

capital allocation now concentrated on ongoing projects, particularly in Germany and the US. We

have also advanced the timeline for new capacity by one year, in line with the group's indication

of stricter capital allocation. Furthermore, we have revised our zinc price forecasts upward

following a better-than-expected performance in the first half of the year, which has enabled the

group to secure hedging levels moving forward at attractive price points.

Table 1:Befesa's key operational data

2024 2025 2026E 2027E 2028E

Actual Actual Old New Old New Old New

Blended zinc price (EUR/t) 2,549 2,571 2,544 2,690 2,481 2,566 2,481 2,679

Installed capacity (kt) 1,720 1,743 1,750 1,750 1,860 1,750 1,860 1,860

Treatment charge (EUR/t) 157 71 194 72 198 181 198 191