Norsk Hydro (Buy, TP: NOK50.00) - Expecting a weak Q4
We are 15% below Bloomberg consensus on Q4e EBIT and 19% below on the DPS for 2018 (results due at 07:00 CET on 7 February). We have cut our 2018–2019e underlying EBITDA by 10–15% (2020e unchanged) due to lower prices, but the medium-term risk reward still looks attractive on the back of our expectations of higher aluminium prices and a green light in Alunorte from Q2 2019e. We reiterate BUY but have cut our target price to NOK50 (54).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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