The Scottish Salmon Company (Hold, TP: NOK17.00) - Higher than expected costs in Q4
The 2018 trading update revealed higher than expected production costs, but also higher harvest volumes. Overall, operational EBIT was 18% below our estimate and 2% below consensus. We have lowered our margin estimates due to the higher costs in Q4, but have increased our harvest volume forecasts. We reiterate our HOLD recommendation and NOK17 target price.Scottish Salmon Company is engaged in the production and sale of Scottish salmon along with complementary investments in other Scottish seafood products. Co. conducts all its salmon farming, processing, and sales and marketing activities through its subsidiary, The Scottish Salmon Company Limited.
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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