Elkem (Hold, TP: NOK22.00) - Oversupplied markets set to persist
We expect Q1 EBITDA of NOK734m (results due 07:00 CET on 18 April), driven by sluggish silicones prices and muted silicon markets. We have increased our 2025–2026e EPS by 5–6% to reflect an uplift in European silicon prices, and raised our target price to NOK22 (20). We reiterate our HOLD, as we continue to fear Silicones will be oversupplied for many more years, silicon prices should stay at current levels, given where energy prices are, while carbon prices should come down somewhat on lower met coal prices and soft demand.Q1 EPS set to suffer from Silicones not contributing, while higher depreciation leaves little left to the bottom line. After significant capex spend in recent years, Elkem’s D&A line is nearly twice the size of that of its IPO year in 2018 (NOK1.3bn in 2028e versus NOK2.6bn in 2024e). With Q1 EBITDA of only NOK734m, we expect an EPS of NOK-0.06.
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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