Lerøy Seafood (Buy, TP: NOK65.00) - Board trims dividend and sees increased risk in 2020
The company has proposed cutting the previously announced NOK2.3/share 2020e dividend to NOK1.5/share with the option to pay NOK0.8/share at a later stage. The board also sees increased cost risks in 2020 due to Covid-19. Following the soft trading updates from Mowi and Grieg Seafood, we have revisited our Q1 estimates for Lerøy Seafood and now forecast operational EBIT of NOK787m, 21% below consensus. We have cut our 2020e by 10.6% and trimmed our target price to NOK65 (68), but reiterate our BUY. Results are due at 06:30 CET on 14 May.Leroy Seafood Group is a supplier of seafood. Co.'s primary products are Atlantic salmon and trout. Co. reports within two main segments: Production and Sales and Distribution. The Production segment includes Co.'s activities within production and processing, mainly Atlantic salmon and trout. The subsidiaries in this segment are a main employer along the Norwegian coastline and other areas. The Sales and Distribution segment has a global reach, comprising sales, marketing, product development and distribution of both Co.'s own produced products as well as for external suppliers. Co. is also engaged in nationwide distribution of fresh fish on the Norwegian market.
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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