Norsk Hydro (Hold, TP: NOK55.00) - Still fairly valued
The market responded to what we consider a fairly in-line Q1 report by sending Norsk Hydro down 3%. We have left our 2022–2023e EPS broadly unchanged. Strong Extruded Solutions results were offset by a weaker NOK, while the Rolled Products segment was moved to discontinued operations. We still expect aluminium prices to converge towards USD2,100/t, justified by its cost of production, with coal price futures of now just below RMB700/t. These levels suggest run-rate EPS of around NOK4.5, justifying the current share price of around NOK55. We reiterate our HOLD and NOK55 target priceNorsk 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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