Goldman BUY rating, target price $5.20, due to:

• Goldman forcasts EBITDA to more than double for FY22
• Forecast 9% dividend/FCF yield for FY22.
• DRR has lower leverage than the Fe miners in the event Fe prices roll further, given the high margin nature of DRR’s royalty business.

I think Goldman's forecasts are way too rosy. Many would agree we are nearing the end of the iron ore supercycle.

FY 21 Results

Key Highlights:

• Revenue of $145.2 million with an NPAT of $94.3 million
• Underlying EBITDA of $135.5 million at a Post-demerger margin of 96%
• Declared a Final Dividend of 11.52 cents per share (fully franked) distributing 100% of NPAT

DRR incorporated on 15 June 2020 and demerged from 
Iluka Resources on 2 November 2020. It collects royalties - mainly from iron ore mining at BHP's Mining Area C (MAC). Essentially a company that collects a cheque without lifting a finger.

There isn't much of a "growth" story here, and is largely dependent on external parties where Deterra doesn't have control over such as the growth of the MAC South Flank mining capacity.  We are yet to see what "identification and evaluation of new royalty opportunities" exactly are. With a net cash position of $40 million hopefully something interesting comes out soon.

Disclosure: held.