Yara (Buy, TP: NOK550.00) - EU gas prices high, but so is EPS
While the Q2 results were overall slightly above expectations, we have cut our 2023–2024e EBITDA by 8–9% on the back of the recent ~20–30% drop in crop prices and the rise in EU natural gas prices from USD30mmbtu to USD50mmbtu. In turn, we have reduced our target price to NOK550 (600). However, we continue to believe Yara’s business model, with more high-quality fertilisers and a diversified international presence, will allow it to benefit from the large price fluctuations, and reiterate our BUY.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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