Lerøy Seafood (Buy, TP: NOK70.00) - Turning the corner
Although the Q2 report saw a headline EBIT miss, the management presentation had a positive tone. Growth is plugging along nicely, and costs are set to fall considerably in H2. Trout supply should decline in 2021, providing a better backdrop for what has been a major problem area. With a better supply/demand balance, we expect the NOK0.8 of withheld 2019 DPS to be paid out post Q3. We have cut our 2020–2022e EPS by 5.0–0.9%, but reiterate our BUY and NOK70 target price.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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