Mowi’s strong growth in Norway offset by major problems in Canada

Aslak Berge

But overall, Mowi’s quarterly report was in line with expectations.

Mowi’s quarterly report, released on Wednesday morning, offered few surprises. The operating result was, to a large extent known, via a previous trading update.

The biggest news was the salmon farmer’s guiding harvest volume for next year.

Flat to marginally down
“We were positioned marginally below on both figures (2019: 429kt | 2020: 445kt), while Nordic Core consensus is in the range between 446-449kt,” wrote Carnegie analyst Lars Konrad Johnsen in a customer bulletin.

He also noted that Mowi’s estimate of global supply growth in 2020, between one and six per cent, is also in line with his four per cent estimate.

Johnsen and Carnegie have a sales recommendation and price target of NOK 195 for Mowi.

“With limited surprise in the published figures, we expect to do only marginal tweaks to our estimates (0-2% on 2020-21 following somewhat higher volumes). With us positioned in the lower end of consensus expectations for the quarter, we believe overall results are in-line to somewhat disappointing versus market expectations. Hence, the share is seen flat to marginally down (0-2%) over the day, ” he predicted.

Neither does Sparebank1 Markets’ analyst Tore A. Tønseth find major surprises in the report presented this morning.

MOWI’s volume guidance for 2020 indicate 10% volume growth in Norway, but 2-3kt is probably related to the acquisition of Strømmen, leading to an underlying growth closer to 8-9%. The strong growth in Norway is offset by major problems in Canada, where MOWI forecasts only 44kt in 2020, down 18% YoY (10kt), this is much lower than we expected and really shows the negative impact of extraordinary mortalities in East Coast Canada earlier this year, ”Tønseth wrote in a client email.

“When it comes to cost next quarter, MOWI sees higher cost in Scotland and Chile, and Canada is likely to remain high. No cost guidance is given for Norway, which means stable development,” he said.

Tønseth has a BUY recommendation with a price target of NOK 235 for Mowi.

“In total, we expect just minor changes to our estimates after this report, but the MOWI share has been very strong lately and is currently close to our target. Mowi now trades at 20x P/E 2019 and 15x 2020,” he said.

Mowi’s share price is down marginally just after the opening of the Oslo Stock Exchange on Wednesday. The stock was last traded at NOK 227.


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