Scandi Standard (Buy, TP: SEK51.00) - Headwinds expected to last
A weak Q3 was expected given the rising raw material prices, the challenges in Ireland and Sweden, and the low export prices (previously highlighted by the company). Hence, the Q3 headline figures were in line with our expectations and consensus, with EBIT of SEK30m. The company did, however, surprise us with its guidance that these challenges would likely worsen in Q4, and that costs would increase further. Denmark remains a headache, and we struggle to see how the announced measures can address the situation. We have cut our 2021–2023e EPS by 48–10% and cut our target price to SEK51 (65), but we reiterate our BUY.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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