Chr. Hansen (No_rec, TP: DKK) - Discontinuing coverage

We have discontinued coverage of Chr. Hansen in light of its combination with Novozymes. Our last published recommendation, target price, and estimates should no longer be relied upon.

Chr. Hansen (Hold, TP: DKK582.00) - Down to HOLD, target price raised

We forecast Chr. Hansen to reach the high end of its 2023 guidance of 10–12% organic revenue growth and a 26–27% EBIT margin, but expect the combined entity (Novonesis) to issue a new guidance upon completion of the merger. As Chr. Hansen shareholders are set to receive 1.5236 new B-shares in Novonesis, the changes in our Novozymes model translate into a raised Chr. Hansen target price of DKK582 (536), and we have thus downgraded to HOLD (BUY).

Chr. Hansen (Buy, TP: DKK536.00) - Order timing boosting volumes

Q4 organic revenue growth was strong at 16% YOY, with c9%-points driven by volumes and c7%-points by pricing, supported by order timing. The 2023 calendar year organic revenue growth guidance was raised to 10–12%, indicating c7% organic growth for the remaining four months of the year. The announcement earlier this week about NewCo’s organisational structure strengthened our confidence in the merger with Novozymes closing by end-2023. We reiterate our BUY and DKK536 target price.

Chr. Hansen (Buy, TP: DKK536.00) - Merger benefits on the horizon

Merger benefits on the horizon The merger limbo and destocking across the peer group has hampered the share price, while its financial performance remains strong. For the pending merger with Novozymes (NewCo), we are confident in the 2025 organic growth and EBIT margin targets, and forecast higher potential beyond 2025, driven by HMO and APS. On our forecast for strong Q4 results, we have upgraded to BUY (HOLD) and reiterate our DKK536 target price.

Northern Lights

Chr. Hansen (Hold, TP: DKK536.00) - Down to HOLD, target price cut

While we have made no changes to our Chr. Hansen model, we have updated our Novozymes model following its Q2 results, affecting our combined DCF. As Chr. Hansen shareholders will receive 1.5326 new B-shares in the Novozymes merger, the changes to our Novozymes model translate into a Chr. Hansen target price reduction to DKK536 (571), and we have thus downgraded to HOLD (BUY).

Northern Lights

Chr. Hansen (Buy, TP: DKK571.00) - Pricing key for organic growth

Q3 organic revenue growth was driven by a strong price contribution and modest volumes, adding to a revised 2022/23 organic revenue growth guidance from 8–11% to 9–11%. FCF before special items was raised from EUR180m–220m to EUR200m–230m on lower investments, while the EBIT margin before special items of 26–27% was kept. We forecast a still-strong pricing contribution in Q4 and improved volumes. We reiterate our BUY and DKK571 target price.

Chr. Hansen (Buy, TP: DKK571.00) - Pricing drives organic growth in Q3

Q3 group organic growth of c9% YOY (split c7%-points from pricing and c2%-points from volumes) was below our estimate (9.9%) and consensus (9.7%). The EBIT margin before special items was 27.5% (we forecast 27.3%, consensus 27.1%). The 2022/23 organic growth guidance was revised to 9–11% (8–11%). We expect limited 2022/23 consensus EPS revisions, and a neutral share price reaction today.