Norsk Hydro (Sell, TP: NOK55.00) - Softening aluminium market
We have made only small estimate changes after the Q3 report, which we view as in line after adjusting for one-offs. Following a decline in Chinese coal prices, we have lowered our 2023–2024 aluminium price estimate from USD2,100/t to USD2,000/t. However, this is neutralised in our 2023–2024 estimates for Norsk Hydro by its increased hedging (20% hedged at USD2,400/t in 2024e) and prospects of higher CO2 compensation (NOK3.7bn in 2023e) from the Norwegian government. We reiterate our SELL and NOK55 target price.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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