In this equity report, analysts Kristian Stemme and Simon Meden take a deep-dive into Drillcon. Drillcon is an established supplier of drilling solutions to companies in the mining industry and it has been building its track record since 1963. Through expansion in South America and increased prospecting trends in its European markets, Drillcon is estimated to achieve a net income of SEK 51.6mn. A target P/E multiple in line with the historical average of 8.0x indicates a potential upside of 31.1% and a recommendation to buy.
- Long term contracts with established partners such as LKAB and Boliden create reliable revenue streams and yields further opportunities abroad.
- The company’s expansion into the Latin market is estimated to generate sales of SEK 30mn in year 2022. The Latin market is one of the richest continents in untapped mineral reserves, yielding further growth and expansion opportunities.
- Drillcon is currently trading below its historical average P/E multiple of 8.0x. Taking the estimated earnings per share of SEK 1.2 in year 2022E into account, this implies a share price of SEK 9.2, giving the stock an upside of 31.1%.