Borregaard (Buy, TP: NOK200.00) - Demonstration of pricing power
Q4 EBITDA beat our estimate and consensus by 9%, fuelled by higher selling prices in BioMaterials. Borregaard said it expected selling prices to remain broadly static going into 2023, implying consensus for the BioMaterials division could come up sharply. Fine Chemicals also surprised positively, again with higher selling prices than we and the market expected. We have made minimal changes to our 2023–2024e EPS and reiterate our BUY and NOK200 target price.Borregaard is a supplier of specialized biochemicals for a global customer base. Co.'s main products are lignin-based products and specialty cellulose, but its product portfolio also extends to vanillin, bioethanol and fine chemicals. Co.'s products serve applications in a range of global end-markets including construction, agriculture, food and beverages, transportation and pharmaceuticals. Co.'s business model is closely linked to the integrated nature of its biorefinery in Norway, which utilizes the wood components to produce a portfolio of products. Co. operates in three business segments: Performance Chemicals, Specialty Cellulose and Other Businesses.
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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