Borregaard (Buy, TP: NOK260.00) - Offsetting higher costs
The Q1 report was solid with an EBITDA of NOK400m, 16% above our estimate and 18% above consensus. Strong performances across all business segments contributed to the beat, although rising inventory values somewhat dampened the effect of higher raw materials costs (we estimate a benefit to COGS of NOK20m–40m). We have increased our 2022–2023e EPS by 2% following a strong performance from BioSolutions and continue to see upside potential in the shares. We reiterate our BUY and NOK260 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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