Atlantic Sapphire (Buy, TP: NOK77.00) - Not what we hoped for
Atlantic Sapphire’s H1 report revealed higher than expected costs with guidance for lower harvest volumes in H2, while challenges in securing liquid oxygen in the US have led to reduced feeding and a controlled harvest of smaller fish. Steady-state harvest is now seen in H2 2022. The reduced harvest for H2, the extraordinary costs incurred in H1 and the costs expected to be incurred in H2 from Danish mortality have led us to make deep cuts in our estimates. We have reduced our probability of success to 50% (previously 60%) and set a new target price of NOK77 (NOK120), but reiterate our BUYAtlantic 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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