Arctic Securities expects Mowi to report stronger-than-guided Norwegian harvest volumes in the second quarter, partially offsetting weaker salmon prices.
Ahead of Mowi’s trading update, analyst Christian Olsen Nordby estimates Q2 EBIT of EUR 201 million, based on a Norwegian salmon price of EUR 6.67/kg (NOK 73), down from a previous assumption of EUR 7/kg.
However, Arctic’s well boat tracker suggests Mowi harvested around 90,000 tonnes in Norway during the quarter, approximately 6,000 tonnes above the company’s guidance of 84,000 tonnes.
The higher harvest estimate has prompted Arctic to increase its second-quarter forecasts. The bank has not changed its full-year volume assumptions, however.
According to Arctic, biomass growth at the end of the first quarter was flat year-on-year and approximately 6% lower when adjusted for the acquisition of Nova Sea, limiting confidence in stronger harvest volumes later in the year.
Arctic maintained its Buy recommendation on Mowi and lowered its price target marginally to NOK 240 from NOK 242.
The bank argues that Mowi’s valuation remains attractive despite a prolonged period of earnings downgrades across the salmon farming sector.
“Mowi is today trading at an EV/kg of around NOK 230/kg,” Nordby wrote. “Over the past decade, the company has had an EBIT/kg of ~NOK 23/kg in the better years, which suggests an EV/EBIT around 10x.”
