Yara (Buy, TP: NOK600.00) - It’s more than EU natural gas
Market concerns appear to be focused on Yara’s European foothold. However, we believe this overlooks the fact that the ~35% of Yara’s ammonia produced outside Europe is generating record-high earnings due to the large discrepancy between EU and non-EU natural gas prices. Also, the strong natural gas prices have reduced supply in Europe, contributing to record-high nitrate premiums. These premiums are driven by record-high crop prices, providing an incentive for farmers to use fertilisers. We have raised our 2023e EPS by 7% and reiterate our BUY and NOK600 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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