Yara (Buy, TP: NOK525.00) - High dividends and low multiples
We forecast Yara’s Q1 EBITDA at NOK753m (results due at 08:00 CET on 24 April), reflecting YOY and QOQ fertiliser and natural gas prices declines. We believe sales volumes will not have risen materially as farmers appear to have been waiting for prices to drop before buying in the quarter. We reiterate our BUY and NOK525 target price due to Yara’s attractive valuation and solid dividend prospects. Yara has already announced NOK55/share to be paid out in June. We see room for cNOK50/share more as inventories normalise, while another NOK50 in DPS capacity is built through 2023e.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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