Yara (Buy, TP: NOK425.00) - Europe moving down on cost curve
We estimate Q4 EBITDA of USD381m (results due at 08:00 CET on 9 February). We forecast a 2023 DPS of NOK15, down from NOK55 in 2022, as the ~NOK13 EPS contribution for 2023e looks very modest. We reiterate our BUY but have reduced our 2024–2025e EPS by 10% on lower sales margins and cut our target price to NOK425 (450). Longer-term, we believe little new capacity additions and modest Chinese exports will help tighten the market balance. We expect Yara to report normalised EBITDA of NOK2.3bn in the years ahead, leaving it attractively valued at a 2024e P/E of 10.7x, with an ~8% dividend yield.Yara International is a holding company. Through its subsidiaries, Co. converts energy, natural minerals and nitrogen from the air into products for farmers and industrial customers. Co. provides mineral fertilizers, industrial products and environmental products and services to its customers. Its mineral fertilizer portfolio, sold as five main brands (YaraMila, YaraLiva, YaraVita, YaraBela, YaraVera) represents a range of crop nutrients. Its industrial portfolio contains a range of nitrogen chemicals as well as CO2 and dry ice. Its environmental product and services reduce NOx emissions, control unpleasant odor, prevent toxic gases, avoid corrosion and improve water quality.
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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