Yara (Buy, TP: NOK500.00) - Cash-converting fertiliser prices
We expect Yara to report solid Q1 EPS of USD0.85, reflecting recent fertiliser price rises. However, we must wait until Q2 (where we forecast EPS of USD1.5) for these to take full effect. We have raised our 2021–2023e EPS by 2–7% as higher energy prices (for coal in particular) take effect in the supply-driven market that we believe is coming back. We continue to find a 2022e EV/EBITDA of 6x attractive (given that we expect a supply-driven market). We reiterate our BUY and have increased our target price to NOK500 (475) to reflect the estimate uplift and the strong cash position in Yara following the current demand-driven market.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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