Elkem (Hold, TP: NOK37.00) -
Raising the stakes Elkem’s Q1 report was strong, with EBITDA c30% above our estimates and consensus, driven by better than expected results in silicon products. The company raised cNOK1.9bn in an equity issue and plans to invest NOK3.8bn in a 117,000-tonne capacity expansion in the silicones market with effect from 2024. We have lifted our 2022–2023e net profit by 7% to account for the beat in Q1, while we have cut our 2022–2023e EPS by 3% due to the 10% dilution from the equity issue. We have raised our target price to NOK37 (35) due to appealing economics from the announced investment, but maintain our HOLD as we still believe Elkem is fairly priced at these levels.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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