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Adjusted Q3/20 EBIT of NOK 1,571m, 5% above Factset consensus Grocery sales benefitted from consumers staying at home “Out of home” demand recovered as Covid-19 restrictions were eased Strong Jotun results continue to be driven by decorative paints (Lady)
Companies: Orkla ASA
Arctic Securities
We expect Orkla to report Q3/20 adjusted EBIT of NOK 1,478m, 2% below latest Factset consensus of NOK 1,502m. Driven by 5% NOK weakening Y/Y, we expect overall sales growth of 6%. While we expect Orkla Foods and Orkla Care to report strong results, we expect Orkla Food Ingredients to suffer from reduced demand from hotels and canteens. We increase our estimated EBITDA by 5% for 2021 and 2022, to reflect a weaker NOK and a slower Covid-19 recovery.
Adjusted Q2/20 EBIT of 1,143m vs. Factset consensus of NOK 1,111m Q2/20 revenues of NOK 11,099m, up 5% Y/Y, in line with consensus Hydro Power reported negative EBIT for the first time Profit from associates and joint ventures (Jotun) holding up well
We expect Orkla to report Q2/20 adjusted EBIT of NOK 1,097m, 2% below latest Factset consensus of NOK 1,118m. With consumers staying at home, we expect Orkla Foods and Orkla Care to report another strong quarter. On the negative side, we expect Orkla Food Ingredients and restaurants to suffer from reduced “out of home” demand. We reiterate our Hold recommendation with a target price of NOK 85 per share, as we view current risk/reward as fair.
Since the end of April the Orkla share has underperformed the OSEBX by 25%, as appetite for risk assets has recovered. As interest rates are setting record lows, we argue that valuation multiples are starting to look attractive. We upgrade our recommendation from Sell to Hold, and increase our SOTP based target price from NOK 80 to NOK 85 per share. We argue that downside risk related to food ingredients, restaurants and Jotun is now largely priced in.
Orkla reported Q1/20 adjusted EBIT of NOK 1,143m, in line with Infront consensus of NOK 1,150m. This was not enough to prevent the share from slipping 6% on a cautious outlook for Q2/20. While Orkla Foods and Orkla Care benefitted from stockpiling in March, Orkla Food Ingredients and restaurants suffered from government restrictions. While demand for foods and household products have normalised in April, “out-of-home” activity was down significantly Y/Y.
Strong sales growth of 13% Y/Y already known to the market Adjusted EBIT of NOK 1,143m in line with consensus expectations Orkla Food Ingredients and restaurants showing signs of weakness Valuation multiples above normal following strong share performance
While the OSEBX is down 20% YTD the Orkla share is up, as Covid-19 has resulted in temporary hoarding of certain foods and household products. Orkla is also benefitting from NOK weakening, low interest rates and risk aversion. While all these factors could last for a while, we argue that this is the time to cash in your profits. We reinitiate coverage with a Sell recommendation and a TP of NOK 80, as we expect focus on long-term challenges to drive multiple contraction.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Orkla ASA. We currently have 6 research reports from 2 professional analysts.
Companies: A.G. BARR p.l.c.
Shore Capital
Ocean Harvest Technology (OHT) report FY2023 results in-line with expectations. Product revenues of €3.0m grew at 21% versus FY2022A despite an (expected) H2 2023A decline of 7%, and was a function of lower margin single seaweed sales, which can be volatile. H2 2023 OceanFeed blended sales of €1.3m grew at 21% versus H2 2022. The H2 2023 gross margin of 39.5% supported this and showed a sharp acceleration versus the 35.3% seen in H2 2022. 15 new customers were added across FY2023, and with a ver
Companies: Ocean Harvest Technology Group Plc
Cavendish
Companies: Anpario plc
We are reiterating our Buy rating and $0.25 price target for Starco Brands with the company announcing 4Q23 (December) results after the close on Monday. We believe 2024, with a full compliment of unique, value-added brands which leverage Starco's aerosol and marketing infrastructure in hand, and a laser focus on adding key categories and new relationships, is shaping up as another year of material progress for Starco. We believe there are also continued margin expansion opportunities from both
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Small Cap Consumer Research LLC
AG Barr’s (BAG’s) FY23 results highlighted the strength of the brand portfolio as group volumes (+2.4%) outperformed the UK soft drinks category decline of 2.9%. Key brands IRN-BRU (33% of FY24 revenue) and Rubicon (19% of FY24 revenue) grew 8% and 15%, respectively, as flavour innovation and format mix helped to drive volume growth. Management anticipates margin enhancement initiatives to yield a 100bp operating margin uplift in FY25, aided by greater in-sourcing and other efficiency gains. M&A
Edison
Companies: Wynnstay Group plc (WYN:LON)SDX Energy PLC (SDX:LON)
The Hardman & Co Healthcare Index (HHI) has been running since 2009. Its main function is to highlight the attractions of life sciences investments over the long term. For the second year running, apart from global economic influences affecting world markets, performance in 2023 was dented by the capital-intensive nature of the sector. The HHI fell 3.7%, to 483.8, underperforming the main London markets – FTSE 100 (+3.8%) and FTSE All-Share (3.8%) but outperforming the FTSE AIM All-Share Index (
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Hardman & Co
Companies: Greencore Group Plc
Cyclical weakness in Carr’s Group’s Speciality Agriculture business has affected the company’s fortunes of late. However, the new management team, a strong net cash balance sheet and a record order book in the Engineering division offer optimism. Operational progress, particularly a reversal of fortunes in Speciality Agriculture, should rebuild confidence and a reduction in the current discount to our view of the underlying value.
Companies: Carr's Group PLC
FY23 results are much in line with overall expectations, helped by a much stronger H2 production and higher purchases of independent crops helping to fill the group’s rising mill capacity. A marginally higher than expected average CPO price mill-gate price of $729/tonne drove the revenue outperformance, but the change in production mix impacted gross margins while slightly higher than anticipated interest, tax and minority charges resulted in EBIT, PBT (Adj.) and EPS (Adj.) just below our foreca
Companies: M.P. Evans Group PLC
Greggs (GRG) enjoyed a stronger-than-expected end to FY23 with sales ahead of our estimates and consensus forecasts, enabling GRG to meet its profit expectations for the year. GRG’s strong revenue growth and an improved profit performance in FY23 means it has fared better than many other consumer-facing names during the year. With lower inflationary pressures, the company enters FY24 in a better place with respect to its selling price versus cost inflation than at the start of FY23, when it was
Companies: Greggs plc
Companies: Genus plc
Liberum
Today's news & views, plus announcements from SNN, DOM, GRI, FTSA, WINE
Companies: Naked Wines plc
Capital Access Group
Better than expected to date: The January trading update season has been better than expected, with the ratio of upgrades to downgrades running at 26:16 out of the 101 trading updates that we have analysed. It’s a surprisingly positive start to the New Year which reflects (1) realistic expectations captured in consensus forecasts, (2) consumers’ determination to enjoy Christmas and protect important areas of personal expenditure and (3) a reduction in supply as competitors exit.
Companies: MORE LGRS MPE MRK MTC RBG MEX ZAM
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