Scandi Standard (Hold, TP: SEK60.00) - Nearing turning point in Sweden
Swedish margins are improving, and frozen inventories should be depleted in 2018. We have cut our longer-term margin, reducing 2020e EPS by 7.9% due to intense competition in Denmark and cost inflation. However, we have raised our 2018e EPS by 4.8% and 2019e by 3.2% on a lower guided tax rate. We expect investment to bolster margins over time, but believe this is already reflected in consensus. We reiterate our HOLD recommendation and SEK60 target price.Scandi Standard is a supplier of chicken-based food products in the Nordic region. Co. offers a range of chilled and frozen products under brands such as KronfAY=gel in Sweden, Danpo in Denmark and Den Stolte Hane in Norway, as well as for private label. Co.'s customers are found in the retail, food service and food industry sectors. Co. has operations in Sweden, Denmark, Norway and Finland. The Swedish operations are conducted through the companies KronfAY=gel AB, SweHatch AB, AB SkAY=nefAY=gel and Bosarpkyckling. The Danish operations are conducted by Danpo A/S. The Norwegian operations are conducted through Scandinavian Standard AS. The Finnish operation is conducted through KronfAY=gel Oy.
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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