SalMar (Buy, TP: NOK690.00) - Below consensus for Q3e
We forecast Q3 operating EBIT of NOK1,050m, c18% below consensus. Spot prices have trended lower than expected QTD and we find consensus for Central region’s margin too high. SalMar Central has probably been affected by high sea-lice pressure, but it normally manages choppy waters better than peers. We expect the Sales and Processing margin to improve QoQ as volumes increase. We reiterate our BUY and NOK690 target price.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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