Norsk Hydro (Buy, TP: NOK32.00) - Mounting oversupply
Aluminium supply typically reacts slowly to demand shocks and we now expect significant oversupply in 2020–2021. We have cut our aluminium price expectations by 10% to USD1,580/mt for 2020 and by 5% to USD1,750/mt for 2021. We have cut our 2020e EBIT by 45% and 2021e by 18%, slightly offset by a weaker NOK. We have lowered our target price to NOK32 (38), but reiterate our BUY as the current share price offers deep long-term value in our view.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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