Borregaard (Hold, TP: NOK185.00) - BioSolutions momentum continues
We expect Borregaard to report a Q2 EBITDA of NOK334m, driven primarily by a continued strong performance in the BioSolutions segment. We acknowledge the market’s recognition of Borregaard as a quality company with a strong ESG profile, given the relatively high 2022e P/E of 27x. With its solid market position, unique end-product diversification, and significant growth prospects within the cellulose fibrils market, we believe Borregaard is well positioned to achieve its EPS ambition for 2023 of NOK7.3–9.1. However, we believe this growth trajectory is already reflected in the 2023e P/E of 24x and reiterate our HOLD and NOK185 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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