SalMar (Buy, TP: NOK650.00) - BUY on weakness
SalMar missed headline expectations due to fixed-price contracts and start-up costs for processing facilities, which we see as temporary. Farming remained strong, and the recent acquisition spree has added 16kt to annualised harvest volumes. We have reduced long-term costs for North, as guidance indicates a cost reduction of NOK1/kg from the opening of InnovaMar. The announcement of an offshore farming partnership with Aker, for which Aker will provide NOK1.65bn in capital, also offers an attractive growth option, in our view. We have increased our 2022–2023e EPS by 2.2–2.5% and our target price to NOK650 (640), and upgraded our recommendation 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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