Citi notes Iluka Resources is constructive regarding the mid-term outlook for zircon, expecting a market deficit because of declining supply. The company also expects an upturn in pigment demand for feedstocks by mid-2020.
Citi believes there is an increasing likelihood of a drop in Sierra Rutile production, as it transitions to the operations of one mine before an eventual start up of Sembehun.
The broker amends forecasts for Sierra Rutile production and reduces 2021-23 estimates for earnings by -3-9%. Neutral rating and $9 target maintained.
Target price is $9.00.Current Price is $8.80. Difference: $0.20 – (brackets indicate current price is over target). If ILU meets the Citi target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).