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Highlights

  • Deterra's H1 FY24 royalty revenue increased by 23.4% to AUD 119 million.
  • EBITDA rose 23.6% year-on-year to AUD 113.4 million, with net profit up 24.1%.
  • DRR expects that acquisition of Trident Royalties plc could boost cash flow and growth opportunities.

Deterra Royalties Limited (ASX:DRR) is an Australian company specialising in the management and growth of a diverse portfolio of royalty assets. Its focus is on bulk commodities, base metals, and battery metals. With a market capitalisation of AUD 2.03 billion, the company offers an annual dividend yield of 3.63%.

In the first half of FY24, Deterra Royalties achieved 23.4% increase in royalty revenue at AUD 119 million compared to the previous corresponding period (pcp). This growth was primarily driven by a substantial rise in mining area C revenue, which totalled AUD 118.4 million. The increase in revenue was supported by a 28% year-on-year rise in the realised iron ore sales price, though this was partially offset by a 4% decrease in sales volume. Additionally, the company's EBITDA saw a 23.6% year-on-year increase to AUD 113.4 million, while net profit after tax surged 24.1% to AUD 78.7 million.

On 29 July 2024, Deterra announced it had received a royalty payment of AUD 58.5 million for the quarter ending 30 June 2024, bringing the total royalty receipts for FY24 to AUD 240.6 million. The company also disclosed that its full-year earnings report for FY24 will be released around 20 August 2024.

Outlook

DRR anticipates that acquiring Trident Royalties plc could generate immediate cash flow and present several growth opportunities. The company plans to capitalise on its scalable operating cost structure to maximise the benefits of this acquisition. In the second half of FY24, DRR reported total royalty revenue of AUD 121.6 million, reflecting a 2.18% increase compared to pcp. Additionally, DRR sees potential for organic growth through the expansion of the South Flank project.

Share performance of DRR

DRR shares closed at AUD 3.99 apiece on 01 August 2024. DRR’s share price has decreased by almost 16.35% in the past one year and in the last six months, it has dropped by 25.42%. The stock has a 52-week low and 52-week high of AUD 3.780 and AUD 5.555, respectively. It is currently trading below the average of 52-week high and low.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, and currency, is 01 Aug 2024. The reference data in this report has been partly sourced from REFINITIV.