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

As a leading producer of vitamin K2 concentrate, NattoPharma is positioned to take its share in the emerging K2 supplements market and has an option on clinical applications of the vitamin. In our base case, we see the company delivering a 27% revenue CAGR and a solid ~5 pp EBITDA margin expansion for 2018-23E. We derive a DCF- and multiples-based fair value range of NOK 12-16 per share in our base case, but also identify a blue-sky DCF scenario that could justify NOK 24-35 per share. Marketing material commissioned by NattoPharma