Fortum (Hold, TP: EUR21.00) - High maintenance season
Fortum’s nuclear plants underwent their annual maintenance stoppages in Q3, limiting the availability of the nuclear fleet, while the dry, hot weather is likely to have reduced hydropower output and heating demand, combined weighing on the Q3 results (due at 08:00 CET on 24 October). On this basis we are 4–5% below consensus on Q3 sales and adj. EBIT. Strong electricity prices are likely to provide limited help, as 75% of H2 volumes are hedged at EUR29/MWh. We reiterate our HOLD recommendation, and have trimmed our target price to EUR21 (22).Fortum is an energy company. Co.'s operations are organised in five divisions: Hydro Power and Technology and Nuclear and Thermal Power, which are engaged in its hydro, nuclear and thermal power generation, services, portfolio management and trading as well as technology and research and development functions; Heat, Electricity Sales and Solutions, which consists of Co.'s combined heat and power production, district heating and business-to-business heating solutions, solar business, electricity sales and related customer offering; Russia, which consists of power and heat generation as well as heat distribution in Russia; and Distribution, which focuses on distribution activities in Sweden.
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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