Solid report, sea lice issue remains
SalMar reported operating EBIT of NOK983m, 6% above our and consensus expectations for Q2. Increased cost guidance to combat sea lice in the central region does however put a damper on an otherwise solid report. Management reports 50% contract coverage for H2 at prices above NOK60/kg, which should see Sales and Processing losses diminish. We have made only minor changes to our 2017–2019e EPS and thus reiterate our BUY recommendation and NOK250 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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