Norsk Hydro (Buy, TP: NOK50.00) - Chinese coal price at 10-year high
We expect Norsk Hydro to report EPS of NOK0.49 in Q4 (report due at 07:00 CET on 12 February), reflecting relatively low aluminium prices in early autumn. However, we note Chinese coal spot prices are now at levels not seen since 2008 and 2011, and have raised our aluminium price forecast from USD1,950/t to USD2,020/t for 2021–2022e, reflecting the 12-month futures price for Chinese coal of cRMB650/t. Consequently, our EPS is up by 10% in 2021e and by 8% in 2022e. We reiterate our BUY, and have raised our target price to NOK50 (45).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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