Slightly disappointing Q4 update

Q4/20 operational EBIT of EUR 49m (Arctic: EUR 59m, Cons.: EUR 65m) NIBD of EUR 1,460m vs EUR 1,459m in Q3/20 and EUR 1.4bn target Harvesting volumes of 127’t – 1.8’t below expectations Full Q4/20 report due 17 February

Estimates down on flat growth and low prices

The 2021 volume guidance was disappointing vs our estimate and, coupled with lower price assumptions, we have lowered our estimates in this update. Supply prospects are still healthy and demand could be stronger for longer once the market normalizes. However, we still see high uncertainty short-term and believe consensus will move lower for Q4/20 and H1/21 – we are ~20% below for 2021. We stick to Hold and lower our TP to NOK 170 (175).

Flat volume guidance for 2021, no dividend

EBIT of EUR 80m, in line with the trading update No dividend for Q3/20 (Arctic: NOK 0, Cons.: NOK 0.13) Unchanged 2020 volume guidance at 442’t, 2021 at 445’t (new) Estimates to be revised lower due to recent salmon sales price trend

Q3/20 EBIT above consensus

Q3/20 operational EBIT of EUR 80m (Arctic: EUR 81m, Cons.: EUR 69m) NIBD of ~ EUR 1,460m – marginally above our EUR 1,443m forecast Harvesting volumes of 126’t – 2’t below expectations Q3/20 report due on Wednesday 4 November

Consensus seems too low for Q3/20

We expect Mowi to release its Q3 trading update around 15 October. Following lower (~NOK 1.5/kg) than previously expected salmon prices for the quarter, we now expect an EBIT of EUR 81m (95) but above consensus at EUR 69m. Our estimates are unchanged from Q4 onwards. Current salmon prices in the mid NOK 40s and adverse demand effects from Covid-19 represent short-term risks. We stick to Hold and our NOK 175 target price.

Increased uncertainty short-term

Mowi reported an operational EBIT of EUR 99m – in line with its trading update guiding. The company’s opex/kg is high, and we have lowered our estimates by 6% and 7% for 2020–21. As Mowi’s NIBD is on par with its target, we now assume zero dividends for H2/20, while expect NOK 8 per share for both 2021 and 2022. The company is however vulnerable to soft salmon prices, and we stick to our Hold rating and lower our TP to NOK 175 (185).

Estimates to be lowered by 5-10%

EBIT of EUR 99m, in line with trading update guiding of EUR 96m No dividend for Q2/20 (Arctic: NOK 1.0, Cons.: NOK 0.8) FY/20 volume guiding lowered by 8’t (Scotland) to 442’t Estimates to be revised lower by 5-10%

Stronger than expected within most regions

Q2/20 operational EBIT of EUR 96m (Arctic: EUR 80m, Cons.: EUR 81m) Better than expected margins in all regions except Norway NIBD at EUR 1,380m vs EUR 1,357m in Q1/20 (Arctic: EUR 1,359m) Share price relief likely due to earnings beat

Minor estimate changes ahead of Q2/20

Salmon prices held up much better than feared during Q2/20, and although Norwegian prices came in NOK 4/kg above our previous assumptions, US prices disappointed. Mowi is set to release its trading update around 15 July, and we now expect an operational EBIT of EUR 80m (83) vs consensus at EUR 75m. Seasonality adds short-term risk, and we stick to our Hold rating as well as our NOK 185 target price in this preview.

Short-term noise in China

Covid-19 has been identified on a cutting board for salmon The Chinese have apparently stopped all sales of salmon China comprises 5% of global demand Short-term noise and bad timing, but very modest impact longer-term

Modest DPS next few quarters?

The Q1/20 report contained few surprises with figures in-line with the trading update. The FY/20 volume guidance was kept unchanged and costs in all regions except for Scotland are expected to be stable going into Q2/20. We have lowered our FY/20 estimates by 10% as we previously expected lower costs, while we have made minor changes to FY/21. We stick to our Hold rating as well as our NOK 185 target price.

Report in line, estimates to trend lower

EBIT of EUR 109m in line with trading update guiding (EUR 107m) FY/20 volume guidance reiterated at 450’t (450’t) FY/20 cash flow guiding virtually unchanged FY/20 estimates to be lowered by ~10% (costs), modest FY/21 changes

Q1/20 below expectations, no dividend

Q1/20 EBIT of EUR 107m (Arctic: 128m, Cons: EUR 155m) Harvesting volumes of 83’t (84’t) EBIT/kg margins below expectations in all regions except for Chile Postpones dividend in light of COVID-19, costs set to increase

High uncertainty short-term

Mowi is expected to release its trading update around 14 April, and we expect a Q1 EBIT pre FV adj. of EUR 128m (123) vs consensus at EUR 181m. The Coronavirus has created uncertainty in the entire value chain and spot prices have trended lower recently. We believe there is downside risk to Q2/3 and would not be surprised if Mowi lowers its DPS which would be negative for the yield. We stick to Hold and lower our TP to NOK 190 (235).

Estimates coming down on higher costs

We have lowered our 2020 estimates by 8% following higher cost assumptions, mainly for Norway and Canada, as well as a lower contribution from Consumer Products. In addition, higher than expected WC and CapEx implies that Mowi will be above its NIBD target during H2/20, which could represent downside risk to the quarterly DPS of NOK 2.60. As of now, we still find valuation to be fair and stick to our Hold rating and NOK 235 target price.

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20th March 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

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