Production was down -5% in the September quarter and sales down -18%. This outcome was driven by depletion at Murray Basin and lower production from Sierra Rutile.
With both sales and production down this indicates to UBS that inventory is low and sales are being limited by production and not the market. Despite lower sales, revenue rose 18%. Full year guidance for Sierra Leone rutile is lowered to 135,000t, subject to the resolution of the strike action. However, strong run rates mean synthetic rutile production guidance is increased to 210-215,000t.
UBS maintains a Buy rating and $11.75 target.
Target price is $11.75.Current Price is $8.50. Difference: $3.25 – (brackets indicate current price is over target). If ILU meets the UBS target it will return approximately 28% (excluding dividends, fees and charges – negative figures indicate an expected loss).