Norsk Hydro (Sell, TP: NOK55.00) - Softer Chinese aluminium demand
We reiterate our SELL and NOK55 target price, as in our opinion, global energy prices and softer aluminium demand from China should keep aluminium prices at USD2,200/t. We still believe the market is overlooking that 25–35% of consensus EBIT for 2024–2025 is of lower quality, as it stems from declining temporary electricity price arbitrage and government subsidies, which have a high risk of being reduced further or removed. We estimate Q3 EBITDA of NOK4.5bn.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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