Lerøy Seafood (Buy, TP: NOK70.00) - Trout outlook improving
We expect Lerøy Seafood to report operational EBIT of NOK242m in Q3 results due at 06:30 CET on 11 November, 11% below consensus of NOK270m. Trout prices are still lower than last year, but with standing biomass now down 12% YOY, we expect prices to recover. Increased MAB means that some volumes may be pushed into Q4. While this would be positive for realised prices, it implies a negative effect on Q3 costs. We reiterate our BUY and NOK70 target price as we believe operational improvements should gradually materialise in H2 and 2021.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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