Valuation of Grieg Seafood ASA

Abstract

Improved capacity utilization in 2018 Grieg Seafood is equipping for organic growth with investments in surveillance technology and smolt facilities. These investments are essential to increase harvest volume and reduce costs. Investment in surveillance and monitoring technology seems to yield results as sea-lice levels decreases in earlier troubled regions. One of the expected contributors to the future EBIDTA margin is Grieg Seafood’s improvement in operational efficiency. Supply and demand In the short term-supply is expected to grow as both smolt release and standing biomasses are higher y-o-y. Increased supply can expect to be met by a growing demand as health trends and increased demand from European consumers are expected to strengthen demand. Salmon price In the short-term we see salmon prices to remain above NOK 60 per kg. The company’s high exposure to the spot market will be beneficial for the company as its sensitivity to the spot price remain high. We see the salmon price to stabilize close to NOK 60 per kg as supply and demand stabilizes.