Yara (Buy, TP: NOK475.00) - Attractive on normalised earnings
We expect Q2 EBITDA of USD560m, with a QOQ decline in margins but a pick-up in volumes from a sluggish Q1 (results due at 08:00 CET on 19 July). We have also included an extraordinary DPS of NOK15 in our estimates, based on a solid NIBD/EBITDA and strong cash flow in Q2e. We have only made minor changes to our EPS estimates. We find Yara attractively priced at a 2024e P/E of 9x (versus its 11x historical average) on normalised earnings and a solid balance sheet, with a NIBD/EBITDA below 0.75x at end-Q2e. We reiterate our BUY but have reduced our target price to NOK475 (525) to account for the recent NOK55 DPS.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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