Lerøy Seafood (Buy, TP: NOK88.00) - Soft Q3 expected
Following the mini-profit warning on lower volumes and higher costs in Q3, we expect operating EBIT of NOK478m, 43% below consensus of NOK840m. The trading update of 7 October revealed 7% lower volumes than we expected, as well as guidance for higher costs than the company had indicated. Despite a softer Q3e, the company kept its FY harvest guidance, which all else being equal should be positive, as volumes are pushed to Q4 when prices are higher. We have cut our 2021e EPS by 10.1%, mainly to reflect lower Q3 spot prices, and trim our 2022–2023e EPS by 1.5-0.6%. We reiterate our BUY, but lower target price to NOK88 (90). The Q3 results are due at 06:30 CET on 11 November.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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