Norway Royal Salmon (Hold, TP: NOK265.00) - Triploid challenges continue
We forecast Q2 operational EBIT of NOK34m. We expect the high contract share (guided at 87%) at a price far below spot to weigh on earnings in Q2 and the rest of 2022. On 14 July, the company announced a cull of 0.8m fish due to disease and lowered its harvest guidance for 2022 to 30kt (32kt). Following share price appreciation towards SalMar’s bid price, we have downgraded to HOLD (BUY) but reiterate our NOK265 target price.Norway Royal Salmon has developed from a sales and marketing company for farmed salmon into an integrated seafood company. Co. is a fish farming company with activities in two main segments: fish farming and sales. The fish farming business includes salmon farming and harvesting activities. The fish farming business is divided into two regions: Region North, which consists of the fish farming business in Senja and West Finnmark; and Region South, which consists of the fish farming business in the area around Haugesund. The sales segment includes the purchase and sale of salmon, as well as Co.'s chain management activities.
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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