SalMar (Buy, TP: NOK520.00) - Q2 in line, but proposed cancellation of shares a positive
Q2 operating EBIT was NOK1,745m, 7% above our forecast but 2% below consensus. Farming was in line, while losses in Sales & Processing were lower than expected. The Q3 cost guidance was cut for Central region and up for North region. The board proposed cancelling 13.1m outstanding treasury shares following the sale of Frøy, removing share overhang and adding c3% to our DCF fair value. The 2023 harvest guidance of 259kt (Norway and Iceland) was unchanged, but Norskott was cut from 34kt to 27kt. We expect marginal changes to consensus 2023e EPS following the report but the stock to come up 3–5% today on the share cancellation.SalMar is a producer of Atlantic salmon and is integrated from roe and smolt to products and sales. Co. has farming operations in Central and Northern Norway, as well as in Scotland. Co. has operating licences for marinephase fish farms and hatcheries in central Norway and Troms County. Co. has 66 licences for production of farmed Atlantic salmon in Norway: 53 in central Norway (More & Romsdal, South and North Trondelag) and 13 in northern Norway (Troms)
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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