Sparebank1 Markets’ salmon analyst Tore A. Tønseth is excited about today’s figures, which he defines as “strong”.
“Although it looks like numbers are in line, with NOK 267m (EUR 27 million) in operational EBIT (6% above our estimate), adjusted for the NOK 25 in write down from Shetland, the EBIT ended at NOK 292m (EUR 29.7 million), 15% above our forecast,” he wrote in financial bulletin on Wednesday morning.
“A large proportion of this, (12%p), is related to higher volumes, but if we look at the Norwegian operations – cost is developing positively, resulting to an operational EBIT around NOK 25/kg for both Rogaland and Finnmark. To put this in perspective, Lerøy had a farming EBIT of NOK 16/kg and Mowi close to NOK 20/kg for its Norwegian operation. Although cost in Shetland and BC remains high, GSF’s Norwegian operations are now among the top-performers in Norway,” he added.
Tønseth believes it is “bullish” that the company maintains a target of 100,000 tonnes next year, which means a long jump from this year’s 82,000 tonnes.
“We expect to lift our EBIT estimates with 2-4% after this report and is likely to stick with our Buy recommendation,” added Tønseth. Sparebank1 Markets has a target price of NOK 125 for Grieg.
Pareto analyst Carl-Emil Kjølås-Johannessen pointed out that the current operating profit is seven per cent higher than the consensus estimates.
“Strong margins and harvest volumes in Rogaland and Finnmark, as well as an improved result in Canada, is impacting positively, while a very poor result in the UK is offsetting some of this,” wrote Kjølås-Johannessen.
“We will likely lower our 2019 estimates with around 5% due to the challenges in the UK offsetting the positive performance in other regions,” he added.
In the longer term, he is more optimistic on behalf of the company.
“However, into 2020/2021 increased estimates for Rogaland and Finnmark will probably offset some of weaker expectations for the UK. All-in-all we find the report positive as operations in the major regions are progressing well. We have a Buy recommendation, TP NOK 135 on GSF,” he concluded.