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.

Northern Lights

Elkem (Hold, TP: NOK37.00) - Silicones still struggling

We expect Q1 EBITDA of NOK1,493m (results due at 07:00 CET on 28 April), 5% above consensus, driven by still-strong performances by Silicon Products albeit past its peak, and Carbon Solutions (we forecast divisional EBITDA of NOK1,233m and NOK311m, respectively). However, we expect another weak quarter from Silicones, for which we forecast EBITDA of NOK-11m, as Chinese silicones prices continued to slide in Q1, with overcapacity trumping easing covid-related restrictions. We reiterate our HOLD a...

Northern Lights

Elkem (Hold, TP: NOK37.00) - Likely earnings trough in Silicones

Q4 EBITDA missed our estimate by ~14%, largely explained by Silicones, where EBITDA of NOK-52m was hurt by a NOK175m one-off in inventory write-downs and extraordinary maintenance costs (the other divisions were much closer to our expectations). Following curbed Covid-related restrictions in China and a small uptick in DMC prices, we have a slightly more positive view on Silicones, prompting us to raise our 2024–2025e EPS by 3% and in turn our target price to NOK37 (35); given the limited potent...

Northern Lights

Elkem (Hold, TP: NOK35.00) - Past the peak

We have downgraded Elkem to HOLD (BUY) and have reduced our target price from NOK40 to NOK35, as we believe earnings in the Silicones segment are set to be negative for 2023e, while the record-high profit in the Silicon segment from 2022e is set to normalise. We are c10% below Bloomberg consensus EBITDA for 2023e and 2024e. We believe a P/E of 8x for 2023e is fair, and struggle to identify upside potential from a share price that did not re-rate when trading at a run-rate P/E of ~1x at peak, whi...

Northern Lights

Elkem (Buy, TP: NOK40.00) - Offsetting silicones trough

Q3 EBITDA of NOK3,302m outperformed our forecast by 5% and consensus by 4%, fuelled by a significant beat in the Carbon Solutions segment (EBITDA was ~45% above our estimate). We have edged up our 2023–2024e EPS following the report, with higher expectations for Carbon Solutions largely offsetting a more lukewarm view on Silicones in 2023. We believe Elkem will continue to benefit from wide energy spreads in 2023–2024, and still find the stock attractively valued, at a 2023e EV/EBITDA of 3.9x. W...

Elkem - Direction is down, earnings high

Q3 EBITDA in-line, Q4 will be down q-o-q High Chinese coal price sets a high silicon price floor Leading indicator down, MTM EPS NOK 3.8

Elkem - Q3 in-line, Q4 will be down qoq

EBITDA +4% vs cons. Mini-CMD Silicones weaker, Carbon better, higher eliminations Outlook: Q4 down q-o-q (lower prices)

Elkem (Buy, TP: NOK40.00) - Silicon Products carries the team

We expect Q3 EBITDA of NOK3,154m (results due at 07:00 CET on 26 October) with the main contribution coming from Silicon Products, where we forecast divisional EBITDA of NOK2,322m, still reflecting its attractive energy cost position. Chinese silicone prices (DMC) dived towards ~RMB18,000/t in Q3, marked by weak demand and capacity increases coming on stream. We acknowledge Elkem’s ability to maintain relatively attractive sales prices in a market downturn and forecast divisional EBITDA of NOK61...