SalMar (Hold, TP: NOK480.00) - Operational quality worth paying for
Q1 operating EBIT of NOK1,065m beat our estimate by 6% and consensus by 10%. Impressive cost control, limited fish downgrades compared with peers, and a normal harvest evenly spread through Q1 led to EBIT/kg of NOK32, almost double the peer group average. SalMar guided for a further fall in costs in Q2. We have trimmed our 2020–2022e EPS by 1.5-0.7%, but raised our target price to NOK480 (430) on our view operational quality deserves a higher multiple. However, following the recent rally, we have downgraded to HOLD (BUY).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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