Atlantic Sapphire (Buy, TP: NOK30.00) - Focus shifting to costs
The H1 report revealed a continued good biological performance from new batches with very limited downgraded products. The guidance is for the farm to achieve steady-state biomass in early Q4. Operational costs were higher than we forecast, and investors should start to focus on this as production stabilises. We reiterate our BUY but have cut our target price to NOK30 (35). We have changed from a probability of success valuation to DCF and EV/EBITDA and have updated our estimates for the new cost data.Atlantic Sapphire AS. Atlantic Sapphire AS is a Norway-based company, which farms Atlantic salmon in land-based recirculating systems in Denmark and the United States. The Company uses the production technology Bluehouse, which comprises the entire production cycle - from an egg hatchery to harvested fish ready for truck pick-up. Also, the Bluehouse implies production free of antibiotics, hormones, pesticides, metals and synthetic pigment. The product portfolio includes whole fish, as well as a range of fillets and cuts. The customers comprise primarily restaurants and retail stores on the Unites States market. Also, the Company exports products to such markets as Canada, Chile and Europe.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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