Yara (Buy, TP: NOK550.00) - USD1bn EBITDA in perfect storm
We believe Yara’s solid Q3 EBITDA of USD1bn – representing c10% of its market cap – illustrates its ability to profit from market volatility in a quarter marked by EU gas prices peaking above EUR300/MWh. We have increased our 2023–2024e EPS by 5–6%, primarily due to our lower natural gas cost and higher sales volume estimates, as the Q3 report showed little demand destruction in Yara’s main product categories (namely European nitrates). We continue to find the stock attractively priced at a 2023e P/E of 5x and reiterate our BUY and NOK550 target price. We forecast 2023–2024e total dividend yields of 20–15%.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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