Borregaard (Buy, TP: NOK260.00) - Promising margin picture
Q3 was in our view another strong quarter for Borregaard, with an 8% EBITDA beat versus consensus (and 10% versus our estimate), driven by strong performances in all three business segments. However, we continue to highlight BioSolutions as the main contributor to the company’s improved performance YTD. We have lifted our 2022–2023e EPS by ~1%, with the stronger NOK offset by increased prices in BioMaterials and still-strong trends in BioSolutions. We still see significant potential upside from wood-based vanillin and Exilva, and 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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