Research Capital Corporation has initiated coverage on Canadian royalty company Empress Royalty Corporation (CVE:EMPR) (OTCQB:EMPYF) (FRA:53G), calling it a “different kind of royalty company” with a big year ahead.
The research firm has a ‘Buy’ rating and C$0.70 price target on the TSX Venture-listed stock.
Vancouver-based Empress is focused on writing royalties and streaming agreements on development to production stage mining projects rather than acquiring existing royalties.
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“(Empress) is, in our view, a different kind of royalty/streaming company as it is focused on making smaller investments ($0.5 million to $20 million) with high returns and aims to do so without competing directly with other royalty/streaming companies when possible, which we believe provides higher returns,” analysts at Research Capital wrote in a note.
The firm said that next year is expected to be a “turning point” for Empress as three of its assets start to generate revenues. Research Capital is forecasting 2022 revenues of C$6.6 million and an EBITDA of $3.8 million – “significantly higher” than its 2021 forecasts of $389,000 in revenue and an EBITDA loss of $2.4 million.
Analysts added that the firm has established itself as a viable player in the royalty and streaming sector.
“The company has established partnerships with three groups to help it identify and execute royalty and streaming opportunities that may be overlooked by its competitors. The partners are: Accendo Banco (Accendo), a Mexican bank, that provides EMPR with exclusive access to royalty and streaming deals (likely where Accendo is involved as a lender); and two financial advisory firms (Endeavour Financial and Terra Capital) that can provide deal flow to EMPR.”
Earlier this week Terra Capital increased its holding in Empress to 13.75%, or 14,383,461 shares, a 0.5% increase.
“We believe 2021 and 2022 will be important years for EMPR as all three of its assets are expected to begin generating revenues and we anticipate that the company will make at least one other acquisition to grow its portfolio,” Research Capital added.
Shares of Empress lifted 2.7% today in Toronto to trade at C$0.350 near the close of market on Monday.
Contact Angela at angela@proactiveinvestors.com
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