Elkem (Hold, TP: NOK23.00) - Silicones still singing the blues
We expect Elkem to report soft Q4 EPS of NOK-0.1, driven by sluggish silicone and European silicon prices in the quarter. We see little room for optimism in the years ahead for the silicones market, as we believe the significant oversupply cannot be offset by the possibility of slightly higher demand. On the back of a EUR300/t increase in European silicon prices recently, we have raised our 2024 EPS estimate by 14% and thus also our target price to NOK23 (18). We reiterate our HOLD, as we struggle to see many positive catalysts ahead and believe the modest 0.6x P/B is justified given its loss-making China silicones business.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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