Copper and zinc prices have continued to strengthen in May rising 5% since the start of the month. Volatility has increased, with copper rising 12% to a peak of US$5.12/lb last week before falling back 7% while zinc prices peaked up 8% at US$1.40/lb but have since declined 3%. The strength in its key commodity prices is driving strong earnings upgrade momentum for SFR. We note that a spot price scenario generates 9% and 37% higher earnings for FY25 and FY26 vs our base case. SFR is trading on free cash flow yields of ~10% for FY25, rising to +15% for FY26 and beyond at spot prices. We are reiterating our BUY rating on SFR, with our price target increasing 3% to A$12.00 due to rising spot prices.
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