Bullboard - Stock Discussion Forum Franco-Nevada Corp T.FNV

Alternate Symbol(s): FNV

Metals & Mining Gold

Franco-Nevada Corporation is a Canada-based gold-focused royalty and streaming company. The Company focuses on precious metals, including gold, silver, and platinum group metals. The Company owns a portfolio of royalty, stream and working interests, covering properties at various stages, from production to early exploration located in South America, Central America and Mexico, United States... see more

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Franco-Nevada Corp > TD Upgrade

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Post by retiredcf on Aug 12, 2021 8:57am

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These are US$ targets. GLTA

Franco-Nevada Corp.

(FNV-N, FNV-T) US$155.11 | C$194.17

Q2/21: Revenue Bump from H1/21 Vale Payment Accrual Event

FNV reported Q2/21 adjusted EPS of $0.96, slightly below TD at $0.98, but above consensus of $0.94. Adjusted EBITDA for the quarter was $290.0mm (TD: $290.3mm).

Impact: SLIGHTLY POSITIVE

FNV reported Q2/21 delivered GEOs of 166.86 kozs (TD: 171.2 kozs), +60% y/y, and total revenue of $347.1mm (TD: $341.9mm). Revenue was sourced 86.4% from gold and gold equivalents. Geographically, revenue was sourced 91.7% from the Americas (33.4% South America, 25.9% Central America & Mexico, 19.1% U.S., and 13.3% Canada). FNV's top four mining assets (Cobre Panama, Antamina, Antapaccay, and Candelaria) generated a combined $145.5mm in revenue in Q2/21 (TD forecast: $142.3mm), or 48.5% of total mining revenue.
Revenue from the Energy assets increased to $41.1mm in Q2/21, compared with $14.6mm in Q2/20 (affected by COVID-19 restrictions).
Q2/21 reported revenue was boosted by the accrual of two quarters of revenue from the Vale royalty debentures totalling $28mm (15,493 GEOs). Although FNV's acquisition of the royalty debentures occurred in mid-April, the company will collect revenues starting as of January 1, 2021. Going forward, FNV will receive cash payments from Vale every six months during a calendar year (in March and September). FNV will receive its first cash payment in September 2021.
FNV now expects GEO sales in 2021 to be near the higher end of the previously announced guidance and has tightened the GEOs guidance range to 590,000 to 615,000 GEOs (from 580,000-615,000 GEOs previously). Energy revenue guidance has been increased to reflect higher commodity prices. Energy revenue is now expected to range from $155mm to $170mm ($115mm to $135mm previously). Commodity prices used in the revised guidance are: $1,800/ oz Au, $25.00/oz Ag, $1,000/oz Pt, $2,700/oz Pd, $150/t Fe 65% CFR China, $60/ barrel WTI, and $2.75/mcf Henry Hub.

TD Investment Conclusion

We are maintaining our BUY recommendation; our target price increases to $185.00 (from $180.00). We have increased our target EV/2022 EBITDA multiple to 30.0x (from 29.0x), reflecting continued strength in commodity prices and the robust cash flow generated by the company ($245mm in operating cash flow in Q2/21). FNV has ~$1.3bln in cash and available credit facilities to fund further acquisitions.