Yara (Buy, TP: NOK550.00) - Passing the price inflation on
We forecast a Q3e EPS adj. of USD1.5/ share, before a more turbulent Q4e, where natural gas prices have risen sharply and Yara has reduced ammonium production while fertiliser prices have nearly doubled. Its shareholders seem set to benefit from the strong balance sheet (which may prompt an extraordinary dividend of NOK13/share), gradually declining EU natural gas prices, and falling fertiliser prices, while pent-up demand from farmers should lead to solid volumes in a more normal market into 2023e. We still see Yara as attractive at a P/E of 10x on more normalised 2023e earnings, and reiterate our BUY and NOK550 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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