NattoPharma

We terminate commissioned coverage on Nattopharma. Note that estimates and information have not been updated in this report, and will no longer be updated. Any previously published research may thus be out of date.

NattoPharma’s 2020 results exceeded our expectations and the outlook for 2021 onwards with regards to sales growth and operating margins is better than we previously anticipated. Hence, we increase our EPS estimates for 2021-22 by 39% and 26% to NOK 1.23 and NOK 1.60, respectively. For 2023, we forecast EPS of NOK 2.04. On the back of improved profitability, we increase our fair value range to NOK 25-30 (NOK 22-26), implying 2021E EV/EBITDA of 10.3-12.4x. According to a press release dated 2 March 2021, Lesaffre has offered to acquire NattoPharma at a price of NOK 35 per share given a 66.67% acceptance level. This condition is expected to be satisfied. Nordea is acting as receiving agent in the offer. Marketing material commissioned by NattoPharma.

NattoPharma's Q3 numbers came in stronger than we expected and the group continued to execute its long-term growth and margin expansion plan. There was limited news flow on M&A, but we believe that a combination with competitor Kappa Bioscience remains a possibility. We raise our EBITDA forecasts by 4-8% for 2020-22. We also hike our valuation range to NOK 22-26 (20-24) per share, which implies 2020E EV/EBITDA of 14-17x. Marketing material commissioned by NattoPharma.

We raise our 2020-22 EPS estimates by 3-13% after a strong Q2 and ambitious guidance for both 2020 and 2022. We note that competitor Kappa Bioscience attempted a takeover of NattoPharma in Q2 and we believe that M&A lends positive optionality to the equity case ahead. As a result of higher estimates, we raise our DCF- and multiples-based fair value range to NOK 20-24 (17-21), implying 2020E EV/EBITDA (adjusted) of 14-17x. Marketing material commissioned by NattoPharma.

The Q1 report confirmed to us that NattoPharma has a strong outlook for 2020. Given the updated guidance for an EBITDA margin of 10-15%, however, we lower our estimates somewhat (after raising them significantly going into Q1). We set at new fair value range of NOK 17-21 (18-22) per share, implying 2020E EV/EBITDA of 13-16x. - Marketing material commissioned by NattoPharma.

The Q1 sales update indicated ~100% sales growth y/y and the demand outlook for its products looks strong. As long as the company can avoid significant raw material shortages, we believe it is favourably positioned in the current COVID-19 situation. We raise our sales estimates by 14-21% for 2020-22 due to strong organic demand, a COVID-19 boost and positive FX effects. We find good valuation support at current levels and set a new DCF- and multiples-based fair value range of NOK 18-22 (17-20) per share.

Q4 confirmed to us that NattoPharma's recent strong operational trends are continuing. We also note that the company is stepping up product-development efforts to support continued sales growth. Given improved production efficiency and expectations for continued focus on opex control, we raise our EBITDA estimates for 2020-21 by 25-31%. We raise our fair value range to NOK 17-20 (12-16). Marketing material commissioned by NattoPharma.

In our view, NattoPharma reported a solid Q3, indicating that the company is back on its path of growth and margin expansion after a softer Q2. We expect continued healthy growth and EBITDA margin expansion ahead. We maintain our fair value range of NOK 12-16 per share. Marketing material commissioned by NattoPharma

NattoPharma reported a soft Q2 and lowered guidance, prompting us to lower our 2019-21 EBITDA estimates by 22-24%. We believe, however, that the company remains on its growth trajectory and argue that some lumpiness is to be expected. We consider the operational issues reported in the quarter to be largely temporary. We reduce our fair value range to NOK 12-16 from NOK 15-19.

NattoPharma's Q1 indicated to us that the company is well on track to deliver on its sales growth and gross margin targets for 2019. Management also introduced EBITDA guidance, indicating that it is aiming for 10% EBITDA margins relatively soon. As such, we revise our EBITDA margin forecast upwards and find improved valuation support. The company continues to focus on scaling production and driving sales growth ahead. We raise our DCF- and multiples-based fair value range to NOK 15-19 (12-16). Marketing material commissioned by NattoPharma