Decent farming performance in Q3/20

Bakkafrost reported an operational EBIT of DKK 103m – below our DKK 126m forecast. The farming segment exceeded our expectations, but was more than offset by weaker than expected VAP and FOF results. We have lowered our 2020 and 2021 estimates by 1% and 8% respectively in this update, while our 2022 EPS is revised 3% higher. We stick to our Hold rating as well as our NOK 600 target price.

Q3 EBIT below expectations

Q3 operational EBIT of DKK 103m (Arctic: DKK 126m, Cons.: DKK 137m) 2020 volume guidance of 89’t (unchanged) 2021 volume guidance of 106.5’t (unchanged) Estimates to be revised slightly lower

2021 volume guidance will be key

Bakkafrost will release its Q3 results on 10 November and we now expect an underlying EBIT of DKK 126m (147) vs consensus at DKK 148m. The company is expected to release its 2021 volume guidance in its report, and we expect 106.6’t – up from 89’t in 2020. Bakkafrost has significant growth prospects (~150’t in 2026) but we believe this is reflected in the share price and stick to Hold. We raise our TP to NOK 600 (550) as estimates are holding up ok.

Estimates holding up well for 2021

Bakkafrost reported an operational EBIT of DKK 182m – below our DKK 215m forecast and consensus of DKK 189m. Costs should remain high in H2/20 due to adverse impacts from COVID-19, but we expect strong operational performance to return in 2021. We do however still find valuation rich, and see more value elsewhere in the sector. We stick to our Hold rating as well as our NOK 550 target price.

Q2/20 results below expectations

Operational EBIT of DKK 182m (Arctic: DKK 215m, Cons.: DKK 189m) 2020 volume guiding kept unchanged (50’t Faroes, 39’t UK) 2021 volume guiding 5% above expectations (62.5’t Faroes, 44’t UK) Estimates to be revised marginally lower

Modest estimate changes ahead of Q2/20

Bakkafrost will release its Q2/20 results on 25 August and we expect an adj. EBIT of NOK 215m (208) vs consensus at NOK 169m. We have implemented the harvest volumes announced on 2 July (lower than expected), as well as prices for the quarter (NOK 4.4/kg above our previous expectation). Although Bakkafrost is a great company we continue to see more value support elsewhere and stick to our Hold recommendation and NOK 550 target price.

Estimates revised lower on higher costs

Bakkafrost reported Q1/20 results below expectations, and we have lowered our estimates in response to higher cost assumptions. High freight costs for airborne salmon will also weigh on costs in the next few months, and we see uncertainty related to both realized premiums and the salmon sales price trend as volumes are set to seasonally increase soon. We continue to see more value support elsewhere and stick to our Hold rating.

Q1/20 results below expectations

Operational EBIT of DKK 248m (Arctic: 344m, Cons.: 303m) FY/20 volume guiding 3% above expectations CapEx guiding reiterated, dividend proposition remains postponed We expect to lower our estimates

Q1/20 volumes below our expectation

Q1/20 volumes 10% below our expectation (no consensus available) Upside risk to our Q1 price, significant downside to Q2 COVID-19 adds more downside risk than upside

Severe storm resulting in 1.0m lost fish

2020 volume guidance expected to be lowered by 5-6’t Insured farming equipment and fish insured at cost value Estimates likely to come down by 6% for 2020

Scottish operations add to operational risk

Bakkafrost delivered Q4 earnings below street expectations as Scottish margins were weak. The 2020 volume guidance was roughly as expected but we have lowered our estimates in this update following somewhat higher costs for SSC. Bakkafrost still has significant volume growth potential but we find current valuation fair. We stick to our Hold rating and NOK 600 target price following the recent soft performance.

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Nichols - Juicy profits and cash generation

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Hybridan Small Cap Feast - 11 Jan 23

11 January 2023 @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

FY19 in line but Middle East excise duty headwind

Nichols’s trading update signals an in-line FY19 outcome driven by UK market share gains and good international progress. The main news today is the recent 50% excise tax on non-carbonated drinks in Saudi Arabia/UAE. This is a headwind going into FY20 which at this juncture is extremely difficult to quantify given c.80% of in-country sales of Vimto in the Middle East are made during the one month of Ramadan. Our analysis shows a potential c.£2.5-£4m PBT hit. Given the uncertainty we prudently fa