SalMar (Buy, TP: NOK565.00) - Divesting Frøy
On 5 June, SalMar announced that it has sold its 72% stake in wellboat company Frøy for NOK76.5/share or equity value of NOK4.8bn. The sale is set to meaningfully reduce SalMar’s debt, which we now estimate to be 2x EBITDA at year-end. We have updated our estimates to reflect the sale, but reiterate our NOK565 target price. The share-price drop has left 18% potential upside to reach our target price; thus, we have upgraded to BUY (HOLD).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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