Norsk Hydro (Buy, TP: NOK31.00) - Q2 set to be the trough
We forecast Q2 EBITDA of NOK2,630m (results due at 07:00 CET on 22 July), reflecting below-average volumes and the decline in aluminium prices, partly offset by reduced energy costs. We have cut our 2021e EBITDA by 13% as a result of the lower aluminium prices and ‘housekeeping’ estimate changes. We continue to find Hydro attractively valued at a 2021e EV/EBITDA of 4.6x, and reiterate our BUY while we have trimmed our target price to NOK31 (32).Norsk Hydro is an aluminium group based in Norway. Co. is engaged in the supply of aluminium and aluminium products. Co. supplies casthouse products, such as extrusion ingots, sheet ingots and foundry alloys. Co's customers are active in sectors such as the packaging, lithographic, building, automotive and transport sectors. In addition, Co. is engaged in the production of power in Norway. Its business is divided into six operating segments: Bauxite & Alumina, Primary Metal, Metal Markets, Rolled Products, and Energy and Other and Eliminations.
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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