Elkem (Buy, TP: NOK40.00) - Offsetting silicones trough
Q3 EBITDA of NOK3,302m outperformed our forecast by 5% and consensus by 4%, fuelled by a significant beat in the Carbon Solutions segment (EBITDA was ~45% above our estimate). We have edged up our 2023–2024e EPS following the report, with higher expectations for Carbon Solutions largely offsetting a more lukewarm view on Silicones in 2023. We believe Elkem will continue to benefit from wide energy spreads in 2023–2024, and still find the stock attractively valued, at a 2023e EV/EBITDA of 3.9x. We reiterate our BUY and NOK40 target price.Elkem ASA. Elkem ASA is a Norway-based supplier of silicon materials. Its operations comprise such segments as the Silicones that manufactures and sells siloxanes, a range of silicones, and a commoditized products produced by reacting silicon with methyl chloride through various chemical reactions and formulations; the Silicon Materials, which includes manufacturing and selling of various grades of metallurgical silicon and microsilica; the Foundry Products that provides metal treatment solutions to iron foundries and supplies specialty ferrosilicon to the steel industry, and the Carbon, which manufactures carbon electrode materials, lining materials and specialty carbon products for metallurgical processes. The Company serves customers in chemical, solar, electronics, aluminum, construction, refractory, oil and gas industries worldwide.
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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