Investment bank highlights SalMar because of low production costs and offshore farming opportunities

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Led by Mowi, salmon shares rose in value on Wednesday, SEB singled out SalMar.

Just before the close of the stock exchange on Wednesday, salmon shares climbed on an otherwise slightly positive Oslo Stock Exchange. Mowi is leading the way, rising 4.2 per-cent, ahead of Grieg Seafood (3 per-cent), Atlantic Sapphire (2.8 per-cent), Bakkafrost (2.5 per-cent) and SalMar (2.1 per-cent).

There was no significant company-specific news on Wednesday, beyond investment bank SEB raising price targets on a number of shares.

Bent Rølland is an analyst at SEB. Photo: SEB

Opportunity
Among them, SalMar is upgraded to a BUY recommendation, with price targets increased to NOK 595, from the previous NOK 514. The investment bank increased the estimate for earnings per share for 2021 and 2022 by five and seven per-cent respectively. For the third quarter of 2015, SEB expects an operating profit of EUR 46 million, reports TDN Direkt.

“With a tight market in 2021-2022, combined with Salmar as a still low-cost salmon farmer that is also close to its second offshore opportunity, we end up with a price target of NOK 595,” wrote analyst Bent Rølland in a report.

SalMar was last traded at NOK 526.

Trigger
In the third quarter, the experienced analyst expects an operational EBIT of EUR 25.6 million for Bakkafrost, EUR 72 million for Mowi, EUR 17.6 million for Lerøy Seafood, EUR 11 million for Norway Royal Salmon and -6.6 million for Grieg Seafood, including the depreciation of EUR 9 million.

Rølland further wrote that it may be a trigger for the share price of Atlantic Sapphire when the company provides further details of its initial sale from Miami. He expects a price gain of around seven dollars per kilogram, which implies a premium of around USD 1.5 per-kilo, reported TDN Direkt.