Borregaard (Buy, TP: NOK200.00) - Revenues set to rise
We are 9% above consensus for 2023–2024e EPS, which we believe does not reflect Borregaard’s ability to increase prices; it raised speciality cellulose prices by more than 20% in 2022e. Consensus suggests revenue growth of just 5% YOY in 2023e, and 1% YOY in 2024e. We believe higher caustic soda and wood prices, general cost inflation and natural gas future prices of EUR160/MWh in Q4 should have given BioMaterials a solid basis for negotiations for 2023 prices. We 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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