Yara (Buy, TP: NOK500.00) - Q1 results lagged fertiliser prices
Yara reported Q1 EBITDA a bit short of expectations, due mainly to lower achieved prices than the market had expected. Moreover, fixed costs were slightly higher than our forecast. Yara says it will consider further cash returns in the coming quarters (NIBD/EBITDA is 1.54x versus the guided range of 1.5–2x). We estimate a dividend yield of c6% in addition to potential buybacks, bringing the total return up towards 10%. We have cut our 2022–2023e EPS by 2–3% following the report. We still find a 2022e EV/EBITDA of 6x attractive for Yara’s stable earnings and solid cash conversion and reiterate our BUY and NOK500 target price.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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