Borregaard (Buy, TP: NOK260.00) - Price uplift coming
We expect Q1 EBITDA of NOK345m, representing a 14% YOY improvement, driven by resilience in BioSolutions (NOK220m EBITDA contribution) and a ~20% price rise in BioMaterials (NOK87m EBITDA contribution, representing YOY growth of ~36%). We have trimmed our 2022e EPS by 3% on a more aggressive cost picture than we had originally forecast. We believe Borregaard will continue to deliver growth through its specialisation strategy and be able to offset higher costs with further price rises. 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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