Silicones better in Q3, Q4 likely a repeat

Q3 EBITDA 14% better

Elkem (Hold, TP: NOK22.00) - Silicones overcapacity still an issue

We expect group Q3 EBITDA of NOK1,078m (4% below consensus), including NOK140m from Silicones, driven by smaller improvements in the European market. However, given overcapacity in silicones, weak end-market demand and muted commodity prices, we do not expect a material earnings boost in the coming years. We reiterate our HOLD and NOK22 target price. The Q3 results are due at 07:00 CET on 24 October.

Silicones up, carbon down

Q3e EBITDA of NOK +1.05bn, Q4 likely flat. DMC challenging, but 10% price hike. Valuation still depressed: EV/CE of 0.60x vs. peers at ~2.0x.

10% price hike - could lift EBITDA by NOK 500m

A Q2 beat and a 10% price hike from Shin-Etsu

Q2 EBITDA 2% better, Q3e likely flat q-o-q at NOK 1bn. 10% price hike from Shin-Etsu, but no fun in DMC. Valuation still depressed: EV/CE of 0.65x vs. peers at 2.5x. BUY.

Elkem (Hold, TP: NOK22.00) - Large one-off drives positive result

Q2 EBITDA was NOK1,030m, 3% below our estimate and 1% above consensus. EPS beat expectations on deferred tax assets of NOK1,067m from the REC Solar Norway acquisition (some 7% of current market cap). We remain unexcited about the price outlook in Silicon Products and Silicones, and reiterate our HOLD, but have raised our target price to NOK22 (20) on the back of the NOK1.1bn deferred tax asset reported in Q2.

EBITDA 2% better, Q3 likely NOK 1bn

Q2e better than Q1, and a 10% price hike

Elkem (Hold, TP: NOK20.00) - Dependent on supply

We forecast Q2 EBITDA of NOK1,057m, up 2% YOY, driven by a slight improvement in Silicones’ margins. Despite lowering our 2024–2025e Si and FeSi prices by 1–4% due to a decline in silicon metal prices over past months, we have raised our 2025–2026e EPS by 2% on improvements in Silicones and Carbon Solutions. We reiterate our HOLD and NOK20 target price, as we continue to see challenging conditions due to excess supply of silicones with depressed prices. The results are due at 07:00 CET on 12 Jul...

Leading indicators

OECD: The indicator points up from a low level. US: The indicator points up (housing starts, monetary policy, interest rates, real FX). EU: The indicator points up from a low level (bond yields, stock market). Japan: The indicator is neutral (monetary policy, housing starts).

Elkem (Hold, TP: NOK20.00) - Muddling through

Q1 EBITDA was largely in line with our forecast and consensus, while EPS took a hit from derivative losses. We have reduced our 2025–2026e EPS by 6% and our target price to NOK20 (22). Although the balance sheet looks fragile at a NIBD/EBITDA of 3.5x and ICR of 4.2x, we believe higher silicon prices should pull it into healthier territories from Q2. However, we have cut our 2024–2025e DPS to zero. We reiterate our HOLD as we expect the silicones market to continue to struggle with overcapacity, ...

Elkem (Hold, TP: NOK22.00) - Oversupplied markets set to persist

We expect Q1 EBITDA of NOK734m (results due 07:00 CET on 18 April), driven by sluggish silicones prices and muted silicon markets. We have increased our 2025–2026e EPS by 5–6% to reflect an uplift in European silicon prices, and raised our target price to NOK22 (20). We reiterate our HOLD, as we continue to fear Silicones will be oversupplied for many more years, silicon prices should stay at current levels, given where energy prices are, while carbon prices should come down somewhat on lower me...

Elkem (Hold, TP: NOK20.00) - Another one bites the dust

Q4 EBITDA of NOK632m and a decision to not pay dividends for 2023 marked the end of a soft year (EPS in 2023 was NOK0.1 versus NOK15.1 in 2022). We have cut our 2024–2025e EPS by ~15–10% due to higher D&A (which rose by ~NOK100m QOQ), and thus have cut our target price to NOK20 (23). We do not see any material signs of recovery within Silicones given the large capacity additions set for 2024–2025e. We reiterate our HOLD.

Elkem (Hold, TP: NOK23.00) - Silicones still singing the blues

We expect Elkem to report soft Q4 EPS of NOK-0.1, driven by sluggish silicone and European silicon prices in the quarter. We see little room for optimism in the years ahead for the silicones market, as we believe the significant oversupply cannot be offset by the possibility of slightly higher demand. On the back of a EUR300/t increase in European silicon prices recently, we have raised our 2024 EPS estimate by 14% and thus also our target price to NOK23 (18). We reiterate our HOLD, as we strugg...

Elkem (Hold, TP: NOK18.00) - The downturn deepens

Q3 EBITDA of NOK535m was ~29% below consensus, largely explained by Silicones, which reported negative EBITDA for the fourth consecutive quarter (NOK-268m, missing our NOK-215m estimate), as well as disappointing Silicon Products earnings (even when adjusting for one-offs), with EBITDA of NOK526m, 31% below our estimate. We see no clear signs of a turning point for Elkem near-term; we have cut our 2024–2025e EPS by 30–20% and in turn our target price to NOK18 (20). We reiterate our HOLD.

Elkem (Hold, TP: NOK20.00) - In search of lost earnings

We believe a healthier balance in the silicones market is some way off, as significant new capacity is due to come on stream in 2024–2025 (including additional capacity from Elkem), adding to the structural overcapacity. This sets the Silicones division up for a prolonged period of modest earnings, in our view. We have cut our 2024–2025e EPS by ~17–12% on even lower estimates in Silicones and a ~NOK-220m effect from lower CO2 compensation. We reiterate our HOLD, but have cut our target price to ...

Elkem (Hold, TP: NOK25.00) - Silicones remains loss-making

Q2 EBITDA adj. was largely in line with expectations. With silicone prices continuing to decline since our last update, we have cut our 2024–2025e Silicones EBITDA by a further 13–17%. However, with few changes to our Silicon Products estimates, we have reduced our 2024–2025e EPS by 5–6%, and our target price to NOK25 (27). We reiterate our HOLD as we do not see the soft silicones market improving any time soon. At the same time, prices are gradually coming down in the still-profit-making Silico...

Elkem (Hold, TP: NOK27.00) - Silicones set to be softer for longer

We expect Q2 EBITDA of NOK1,175m (10% below consensus), reflecting a persistently weak Chinese silicones market. The DMC price has continued downward QTD to RMB14,000/t, and we expect Silicones’ divisional Q2 EBITDA to be NOK-216m. Still, we believe Silicon Products and Carbon Solutions will contribute to solid results, with divisional EBITDA of ~NOK1.1bn and NOK330m, respectively. We have cut our 2024–2025e EPS by 26–21%, reflecting a delayed recovery in the Chinese silicones market. Combined w...

Elkem (Hold, TP: NOK37.00) - Silicones stuck in first gear

Elkem reported Q1 EBITDA of NOK1,565m, 5–10% above our forecast and consensus. The main beat was in Carbon Solutions, which reported EBITDA of NOK374m, 20% above our estimate. Silicon Products was broadly in line with our forecasts (2% above on EBITDA), while Silicones reported soft EBITDA of NOK-30m (we forecast NOK-11m). We have made minor estimate revisions on the back of the report and reiterate our HOLD and NOK37 target price.