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Financial valuation of Norway Royal Salmon

Pedersen, Andreas Skarsem; Claussen, Hans-Fredrik
Master thesis
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1743318.pdf (3.108Mb)
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http://hdl.handle.net/11250/2479658
Utgivelsesdato
2017
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Samlinger
  • Master of Science [1116]
Sammendrag
Initiating coverage

Share price: NOK 131

Recommendation: Buy

Target price: 170

Key facts

Number of shares (millions) 43.57

Market cap NOK (millions) 5708

Share price NOK 131

Ticker NRS

Stock exchange Oslo Børs

Norway Royal Salmon

Attractive investment case

We see a 30% upside from current share

price to our target price. Until 2021, we

see revenues growing by 22%, whilst

operational costs growing by 28.5%. By

our estimates, we see group EBIT

peaking in 2018, before coming down due to lower prices and costs outpacing

revenue growth.

Our target price of 170 reflects a value per share of 167 NOK for the current

operations, and an additional 3 NOK per share for the development license

project.

NRS faces three main risks. Price risk, cost risk, and disease and escape risk.

Prices are likely to continue to remain strong due to restricted supply growth for

the foreseeable future. Costs have climbed at worrying levels for the past years.

We believe this will continue, but at a slower pace in the coming years. As for

disease and escapes, NRS is not immune, but this risk generally is not as bad as

the media makes it out to be. For instance only a total of 24 salmon (!) have

escaped so far in 2017 according to the Directorate of Fisheries.

We caution investors not to underestimate the effect of costs rising at a rapid rate

the same way oil and gas did recently. A drop in prices will leave a lot of farmers

vulnerable, including NRS.

Millions of NOK 2016 2017E 2018E 2019E 2020E 2021E

Operational revenue 4 224 4 632 4 876 4 966 5 068 5 172

Total operating expenses -3 584 -3 908 -4 119 -4 272 -4 447 -4 606

Operational EBIT 641 725 757 695 621 566

Income from associated companie s 72 80 83 76 68 62

Group EBIT 712 804 840 771 689 629
Beskrivelse
Masteroppgave(MSc) in Master of Science in Business, Finance - Handelshøyskolen BI, 2017
Utgiver
BI Norwegian Business School

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