Industri

Nikko
24.05.2019 kl 11:22 1217

RSinvest skrev Avskrivning?
Q1 2019 EBIT will be weak. Our focus when NHY reports Q1 is not the traditional EBIT, but what NHY does or
says about its investments within Bauxite & Alumina (B&A) and Rolled Products (RP). We see risk that NHY could
write-down the book values for both B&A and RP and/or take provisions for future restructuring. Based on our
analysis, we see risk for write-downs of up to NOK16bn or NOK8 per share. NHY currently trades at PB0.8x,
which is in line with its historical average since 2006. We decrease our estimates and target price from NOK40 to
NOK35 and keep Neutral ahead of the Q1 numbers. We value NHY at PB0.8x, in line with historical average.
1. Risk for write-down in B&A and we question if the rationale behind the acquisition still stands. We
estimate that B&A has had a pre-tax return on capital employed of 3.4% since 2012 and 7.7% since 2016.
Our take is that the returns should have been closer to 13% (when adding 4% country risk premium for
Brazil). Based on this we see risk for a NOK12bn write-down. A write-down in B&A could in our mind start
speculations that NHY could potentially exit Brazil.
2. More likely that we will see provision than write-downs within RP. We estimate that RP has had a pre-tax
return on capital employed of 7.4% since 2010 and 5.4% since 2016. Our take is that the returns should have
been around 8%. The write-down risk is around NOK4bn, but we see it as more likely that NHY could book
restructuring provisions as average return was around 8% pre-2017.
3. Aluminium utilisation seen flat year-over-year in 2019. Our take, based on our analysis of global nameplate
capacity, is that supply growth will be 3.2% in 2019 (driven by China) compared to demand growth of 3%. As
we do not expect global utilisation to increase in 2019 (we estimate 83% utilisation in 2019), we see limited
upside for aluminium prices in 2019. For alumina, we see downside risk to prices when Alunorte restarts
production in Q2. Alumina prices fell when Al Taweelah started production recently, and we expect the same
to happen when Alunorte starts full production. The alumina market is balanced.

Rapportér innlegg

Vennligst skriv inn kommentar på hva du mener er upassende og trykk send. Dersom kommentar ikke er nødvendig, vennligst trykk send direkte.
E-postadressen brukes kun for å få kontakt med deg i forbindelse med advarselen.
E-postadressen brukes kun for å få kontakt med deg i forbindelse med advarselen.