Lerøy Seafood (Buy, TP: NOK65.00) - Resetting expectations
The disappointing Q3 results saw operational EBIT of NOK501m, 25% below our forecast and 24% below consensus, driven by higher costs in Lerøy Midt. Management guided for costs to remain high in Q4, but sees improvement potential. We believe the restructuring case has been pushed from 2019–2020 to 2021–2022, resetting our expectations for 2020. We have cut our 2019–2020e EPS by 17.7–16.6%. As a result, we have cut our target price to NOK65 (72), but reiterate our BUY.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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