CMD in June next catalyst

Bakkafrost - Equity Update

Arctic Securities
10 May 2023 Equity Research

Axel Jacobsen
+47 48 40 31 58
axel.jacobsen@arctic.com

Axel Peter Glede Collett

+47 21 01 32 46
axel.collett@arctic.com
 Buy
Bakkafrost Hold
BAKKA NO | Seafood | Equity Company Update | 10 May 2023 | 19:12 Sell
 

CMD in June next catalyst Financials and estimates changes Target  NOK 800.00 (750)

Bakkafrost delivered a mixed Q1 report: FO margins fell short of expectations but were Key Figures  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e Highlights
Recommendation Buy (Hold)
offset by operational improvements in SCT and a high FOF contribution. FO harvest weights
Revenue   5,553.8  7,130.0  7,836.3  7,666.1  8,149.8 Target Price NOK 800.00 (750)
will be at the same level in Q2, with an improvement in H2, while SCT is set for a good EBITDA   1,351.6  2,242.6  2,897.6  3,117.1  3,298.9 Share Price NOK 709.5
Q2, although the real test will be in Q3. Although we have made minor estimate changes, EBIT   1,144.7  1,826.2  2,149.4  2,196.2  2,347.6 Upside (%) 12.8
we upgrade to Buy (Hold) as we believe the CMD will provide improved visibility on the EPS   16.32  22.73  27.92  28.36  30.46 Market cap (NOKm) 41,922
company’s significant growth potential, and raise our TP to NOK 800 (750), reflecting a 2024 Adj. EBITDA   1,351.6  2,242.6  2,897.6  3,117.1  3,298.9 Enterprise Value (DKKm) 30,169
P/E of 18x and 12x on the company’s 150’t target. Adj. EBITDA margin (%)   24.3  31.5  37.0  40.7  40.5 Number of shares (m) 59
Adj. EPS   10.28  19.02  27.20  28.36  30.46
Mixed Q1 results 12 months share price performance:
Revenue growth (%)   18.3  28.4  9.9  (2.2)  6.3
Bakkafrost reported a Q1 EBIT pre FV adj. of DKK 565m vs our DKK 560m forecast and consensus EPS growth (%)   108.4  39.3  22.8  1.6  7.4 1000 Performance (%) 3M 6M 1Y
BAKKA NO NA NA NA
at DKK 543m. The Faroese farming margin fell short of expectations due to early harvesting (low 950 OSEBX 15.272% 45.868% NA

900
weights) to keep mortality levels down and 50% of volumes were harvested in January at lower DPS   5.14  10.00  11.00  12.00  12.00 850

prices. On a positive note, Scotland delivered significant improvements, and the FOF segment had Dividend yield (%)   1.1  2.2  2.4  2.6  2.6 800

a record Q1 quarter. ROE (%)   10.7  13.6  15.1  14.0  13.8 750

700
ROACE (%)   10.1  14.4  15.1  14.0  14.2
Upcoming CMD will be key 650

600
The company kept all guidance items unchanged: 2023 harvest of 98’t (of which 68’t from FO and EV / Sales (x)   5.3  4.2  3.9  4.0  3.7 550

30’t from SCT), 2023 smolt transfers of 25.6m, 23% contract ratio, and 130’t feed sales. CapEx is EV / adj. EBIT (x)   35.9  17.7  13.2  12.1  11.2 500

still DKK 6.2bn during 2022-2026 to reach 150’t in 2026 with a capacity of 180’t. A CMD will be EV / adj. EBITDA (x)   21.8  13.5  10.6  9.9  9.2
450

400
hosted on 6-7 June with a strategic update and presentation of a new 2024-2028 plan where we P/E adj. (x)   44.5  24.1  16.8  16.1  15.0
350

may see the strategy impacted by the revenue tax proposal, which is expected to be concluded P/BV (x)   2.9  2.6  2.4  2.2  2.0 300

before the summer. EV   29,505.4  30,169.4  30,577.6  30,817.0  30,332.9 250

Jun-22 Sep-22 Dec-22 Mar-23

Minor estimate changes, up to Buy BAKKA NO OSEBX

We have only made minor estimate changes in this update, and we now expect an adj. EPS of
DKK 27.2 (26.4), 28.4 (28.7) and 30.5 (31.2) during 2023-25. Lower harvest weights in FO will
also be the case in Q2 while an improvement is expected in H2. SCT is set for a decent Q2 and
the real test will be in the fall, although the company should be in a better position this year with
its dual treatment vessel. Larger smolts will be put in the sea in SCT during Q3, which should
imply improvements from H2/24. Although we have made minor estimate changes, we upgrade
to Buy (Hold) as we believe the CMD will provide improved visibility on the company’s significant
growth potential, and raise our TP to NOK 800 (750), reflecting a 2024 P/E of 18x and 12x on the
company’s 150’t target.
Bakkafrost: Mixed Q1/23 results

Deviation table Highlights

Bakkafrost Q1/23 Deviation-%

(DKKm) Q1/22 Q4/22 Actual Arctic Cons. Arctic Cons. QOQ YOY Q1 Group results in line with expectations
Sales 1,639 1,940 2,050 1,673 1,679 23% 22% 6% 25%  Bakkafrost reported a Q1 EBIT pre FV adj. of DKK 565m – slightly above our DKK
EBITDA 554 504 714 705 693 1% 3% 42% 29%
560m forecast and consensus at DKK 543m. Harvest volumes were pre-announced,
D&A and impairment -136 -128 -148 -145 -150
EBIT pre FV adj. 418 376 565 560 543 1% 4% 50% 35%
the Faroese EBIT/kg margin was NOK 42.1 (Arctic: NOK 58.3) and Scotland reported
Reported EBIT 510 -53 605 463 543
NOK 28.2 (Arctic: NOK 25.7). The VAP segment reported an EBIT of DKK 6m (Arctic:
PTP 492 -141 586 424 469 DKK -30m), FOF DKK 122m (Arctic: DKK 80m), and other & eliminations were DKK -
Net profit 405 -155 467 348 388 34% 20% 401% 15% 32m (Arctic: DKK -60m). The NIBD ended Q1 at DKK 2,357m (Arctic: DKK 2,423m),
with the deviation due to CapEx.
EPS (DKK) 6.9 -2.6 7.9 5.9 7.0
Adj. EPS (DKK) 4.8 3.4 7.2 5.9 7.0 22% 2% 110% 49%
All guidance items kept unchanged
DPS (DKK) - 10.0 - - -  The 2023 volume guidance was kept unchanged at 98’t, with 68’t in FO and 30’t in
SCT. 2023 smolt releases was also kept unchanged at 25.6m. The contract ratio for
EBIT (DKKm)
2023 is at 23% (unchanged) and feed sales are expected to be ~130’t (unchanged).
Faroese Farming 471 380 314 429 492 -27% -36%
Scottish Farming -53 -149 155 140 134 10% 16%  CapEx was also unchanged at DKK 6.2bn during 2022-2026 to reach 150’t harvest in
VAP -29 86 6 -30 -8 121% 179% 2026 (with capacity of ~180’t). A CMD will be hosted 6-7 June, with a strategic update
FOF 80 103 122 80 79 53% 55% and presentation of a new 2024-2028 plan, where the strategy may be impacted by
Other & eliminations -51 -45 -33 -60 -154 46% 79%
the revenue tax proposal.
Total 418 376 565 560 543 1% 4% 50% 35%
 Referring to Kontali, global supply growth will be 1-2% lower y-y in H1/23 and 4-5%
Harvest tonnes (gwe) higher y-y in H2/23, while a first look at 2024 indicates mid-single digit growth.
Faroese 17,459 19,276 11,005 10,900
Scottish 3,973 5,198 8,093 8,100 Good biology in both regions
Total farming 21,432 24,474 19,098 19,000 1% 1% -22% -11%  Biology in FO is said to be good but the company conducted an early harvest to keep
mortality levels down, leading to lower harvest weights. Harvest weights will remain at
EBIT/kg (NOK gwe)
Faroese 36.0 27.6 42.1 60.9
the same level in Q2 and are then expected to move higher in H2.
Scottish -17.7 -40.0 28.2 22.3  In SCT, operations improved, which has continued so far in Q2, but the key test
Total farming 26.1 13.2 36.2 44.5 -18% -19% 39% remains in Q3. SCT will remain volatile until improvements are expected from H2/24,
and the company expects to release larger smolts in Q3/23 (previously Q2/23).

Source: Arctic Securities Research, Company data, FactSet  4

Lower risk on Scotland during H1/23

Comments BAKKA SCT: Monthly mortality BAKKA SCT: Harvest guiding development

12.0% 50
 The monthly mortality rate decreased
10.0%

1,000 tonnes (gwe)

from 7.9% in September 2022 to 2.9% 40
in December, and Q3/22 partly 8.0%
30
resembled that of 2021. In both years, 6.0%
the full-year volume guidance was 20
4.0%
lowered significantly in Q3, 10
highlighting that the greatest risk is 2.0%
associated with Q3 when sea 0
0.0%
2018 2019 2020 2021 2022 2023
temperatures are the highest Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 2020 2021 2022 2023 Q4 (t-1) Q1 Q2 Q3 Q4
 Bakkafrost is expanding its smolt
capacity towards +18m fish at 500g in
2026, but the incremental effect is not BAKKA SCT: Monthly mortality vs EBIT/kg Targeted smolt sizes
expected to be seen until 2024/25. In
Q2/23, Bakkafrost expects to release
its first batch of large smolt. The new 8.0% R² = 0.7781 500 500
7.0%
wellboat was delivered in late Sep/22, 400
2-year gap
400
Monthly mortality

6.0% 332 350 350

and the freshwater capacity is now at

Grams
5.0% 250
sufficient levels 205 180 205 175
4.0% 150 170 5-year gap
105 125 110 125 89 100 110
 Scotland is set for some decent 3.0%
2.0% 10-year gap
quarters as highlighted in the Q4/22
1.0%
report (harvest weights in Jan/23 at
0.0%
5kg vs ~3.3kg in 2022) -80.0 -60.0 -40.0 -20.0 0.0 20.0 40.0
EBIT/kg (NOK) FO SCT

Source: Arctic Securities Research, Company data, Salmon Scotland  5

New Capital Markets Day on 6 June

Comments Harvest plan of 150’ tonnes in 2026 DKK 6.2bn CapEx plan 2022-2026

 Bakkafrost will host its 2023 Capital 200 2.00

Markets Day on 6 June in Scotland, with a
180
strategic update and updated 2024-2028 180 1.80
plan 1.65
 The last CMD was hosted in 2021, where 160 1.60
150
the company presented 2022-2026
targets. The company guided for 2026 1.40 1.40
140 1.40
volumes of 150’t (underlying capacity of
180’t) based on DKK 6.2bn investments. 0.73
50

1,000 tonnes (gwe)

120 1.20
 Looking at the development since the last 0.55
CMD, smolt transfers in FO has been

DKKbn
100 93 1.00 0.80 0.95
somewhat delayed. In Aug/22, BAKKA
said that it had to lower temperatures in
0.80
the hatcheries to prevent the salmon from 80 25 0.80 0.35
growing too fast. 2023 FO smolt transfers
were previously guided at 17.5m but are 0.35
60 0.60
now at 16.0m. That said, we believe
100
consensus reflects a slower ramp up, with 0.93
40 0.40 0.85
2025 harvest volumes at 122’t
68
0.60 0.60
 On the back of inflation, we would not be
20 0.20 0.45
surprised if CapEx targets are revised
higher
0 0.00
2022 2026 2026 capacity 2022 2023 2024 2025 2026

FO SCT FO SCT

Source: Arctic Securities Research, Company data  6

Bakkafrost: Annual estimates and revisions

Key P&L figures Key assumptions

Bakkafrost New estim ates Changes-abs Changes-% Bakkafrost New estim ates Changes-abs Changes-%
(DKKm ) 2022 2023e 2024e 2025e 2023e 2024e 2025e 2023e 2024e 2025e (DKKm ) 2022 2023e 2024e 2025e 2023e 2024e 2025e 2023e 2024e 2025e
Sales 7,130 7,836 7,666 8,150 399 -53 -55 5% -1% -1% Harvest tonnes (gw e)
EBITDA 2,243 2,898 3,117 3,299 -155 -52 -85 -5% -2% -3% Faroese 66,686 68,000 73,000 79,000 - - - - - -
D&A and impairment -537 -583 -580 -580 -3 - - 1% - - Scottish 23,917 30,000 35,000 40,000 - - - - - -
EBIT pre FV adj. 1,705 2,314 2,537 2,719 -158 -52 -85 -6% -2% -3% Total farm ing 90,603 98,000 108,000 119,000 - - - - - -
Reported EBIT 1,826 2,149 2,196 2,348 97 -22 -55 5% -1% -2%
PTP 1,690 2,028 2,043 2,195 130 -21 -54 7% -1% -2% EBIT/kg (NOK gw e)
Net profit 1,343 1,649 1,676 1,800 92 -17 -44 6% -1% -2% Faroese 38.8 37.2 40.9 40.9 -6.6 -1.6 -1.6 -15% -4% -4%
Scottish -17.1 16.3 15.2 15.2 1.0 - - 6% - -
EPS (DKK) 22.7 27.9 28.4 30.5 1.6 -0.3 -0.8 6% -1% -2% Total farm ing 24.1 30.8 32.6 32.2 -4.3 -1.1 -1.1 -12% -3% -3%
Adj. EPS (DKK) 19.0 27.2 28.4 30.5 0.9 -0.3 -0.8 3% -1% -2% NOR spot price 81.3 92.2 88.0 88.0 - - - - - -
DPS (DKK) 10.0 11.0 12.0 12.0 - - - - - - Realized Faroese price 87.8 96.6 95.9 95.9 -1.2 -0.6 -0.6 -1% -1% -1%
Realized Scotland price 80.1 92.4 89.3 89.3 -0.0 - - -0% - -
EBIT (DKKm )
Faroese Farming 1,913 1,646 1,924 2,082 -294 -76 -82 -15% -4% -4%
Scottish Farming -298 323 344 393 20 - - 7% - -
VAP -51 94 93 120 13 -2 -3 16% -3% -3%
FOF 410 464 416 364 76 26 - 19% 7% -
Other & eliminations -269 -213 -240 -240 27 - - -11% - -
Total 1,705 2,314 2,537 2,719 -158 -52 -85 -6% -2% -3%

Source: Arctic Securities Research, Company data  7

Bakkafrost: Quarterly estimates

Key P&L figures Key assumptions

Bakkafrost Bakkafrost
(DKKm ) Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23e Q3/23e Q4/23e (DKKm ) Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23e Q3/23e Q4/23e
Sales 1,272 1,488 1,639 1,684 1,867 1,940 2,050 1,846 1,920 2,020 Harvest tonnes (gw e)
EBITDA 194 270 554 724 461 504 714 709 704 771 Faroese 14,937 20,694 17,459 13,101 16,850 19,276 11,005 13,500 20,000 23,495
D&A and impairment -123 -151 -136 -137 -136 -128 -148 -145 -145 -145 Scottish 6,914 5,122 3,973 6,646 8,100 5,198 8,093 7,000 8,000 6,907
EBIT pre FV adj. 71 120 418 587 325 376 565 564 559 626 Total farm ing 21,851 25,816 21,432 19,747 24,950 24,474 19,098 20,500 28,000 30,402
Reported EBIT 162 -52 510 1,062 307 -53 605 522 485 538
PTP 158 -44 492 1,057 282 -141 586 488 451 503 EBIT/kg (NOK gw e)
Net profit 131 -3 405 845 249 -155 467 400 370 413 Faroese 12.6 18.3 36.0 63.4 35.6 27.6 42.1 43.9 33.9 33.9
Scottish -16.3 -56.0 -17.7 8.3 -22.9 -40.0 28.2 25.5 5.5 5.5
EPS (DKK) 2.2 -0.1 6.9 14.3 4.2 -2.6 7.9 6.8 6.3 7.0 Total farm ing 3.4 3.6 26.1 44.8 16.6 13.2 36.2 37.6 25.7 27.4
Adj. EPS (DKK) 0.6 1.9 4.8 6.8 4.0 3.4 7.2 6.8 6.3 7.0 NOR spot price 53.9 58.8 78.5 105.1 69.1 72.3 103.8 105.0 80.0 80.0
DPS (DKK) - 5.1 - - - 10.0 - - - 11.0 Realized Faroese price 61.0 66.4 86.4 113.3 77.5 80.7 111.4 112.9 87.9 87.9
Realized Scotland price 59.3 62.5 77.4 97.3 70.2 75.9 100.4 102.2 83.5 83.5
EBIT (DKKm )
Faroese Farming 135 282 471 617 444 380 314 382 437 513
Scottish Farming -81 -214 -53 41 -137 -149 155 115 28 24
VAP 11 28 -29 -108 0 86 6 - 39 49
FOF 105 83 80 112 115 103 122 126 115 99
Other & eliminations -99 -60 -51 -76 -97 -45 -33 -60 -60 -60
Total 71 120 418 587 325 376 565 564 559 626

Source: Arctic Securities Research, Company data  8

ESG Considerations Key ESG risks

Sustainability at Bakkafrost Key risks How Bakkafrost is positioned

• All vegan raw materials in feed is ProTerra certified.
Value chain environmental
 Bakkafrost is well positioned for the increased global ESG focus as impact • Cooperating with Global G.A.P. to develop the next version of the Compound feed
manufacturing standard.
salmon farming has a lower carbon intensity and FCR than other
types of animal protein production. Additionally, salmon has health • 90% of sites have a satisfactorily level of impact on seabed according to the MOM-B
benefits for the end user due to the high content of omega 3 & fatty standards (Faroe Islands) and SEPA (Scotland).
Ecosystem
acids. Bakkafrost is ranked as the 13th most sustainable protein • Targeting 500g smolt size in 2022, reducing time in sea and the fish exposure to seawater
producer in the world on the Coller Fairr Index in 2021 hazards.
 Bakkafrost publishes an annual sustainability report audited by the
Faroe Islands auditing firm Januar. • Mortality rates of 6.6%, 10.8% and 10.8% in 2019, 2020 and 2021, respectively.
Fish health
 The company reports in accordance with the Global Reporting • eFCR of 1.20, 1.26 and 1.24 in 2019, 2020 and 2021, respectively.
Initiative (GRI).
 Salmon farming, and aquaculture in general are not yet included in • Has developed a biogas plant producing 11,000 CO2e renewable energy from its salmon
the EU Taxonomy. Bakkafrost and its subsidiary Havsbrún are hence GHG emissions
farming byproduct.
not taxonomy aligned.
ESG performance data
ESG metric Unit 2019 2020 2021 2022 Target
GHG emissions scope 1 tCO2e 63,632 88,624 74,881 93,646 Down 50% by 2025

GHG emissions scope 2 tCO2e 22,444 30,438 31,851 27,332 n/a

GHG emissions scope 3 tCO2e 310,477 406,207 398,121 412,165 Down 50% by 2025

Carbon intensity (Scope 1+2) tCO2e/tGWE 1.5 1.2 1.1 1.3 n/a
Sustainalytics ESG Taxonomy eligible Disclosed ESG
risk rating activities Targets Renewable energy consumption % n/a n/a n/a n/a n/a

Water usage* Million m³ n/a n/a 6.599 8.969 n/a

26.4 No Yes Employee turnover ratio % n/a 234.3 311.6 257.2 n/a

Employee absence % 5.3% 4.7% 4.4% 4.5% Down 10% by 2023

*0-100 where 0 is best
Board gender diversity % female 20.0% 16.7% 16.7% 33.3% n/a

Source: Arctic Securities Research, Company information  9

Profit and Loss  

Profit and Loss  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e Profit and Loss Statement  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e

Revenue   5,553.8  7,130.0  7,836.3  7,666.1  8,149.8 Adj. revenue   5,553.8  7,130.0  7,836.3  7,666.1  8,149.8

Cost of sales   (4,202.2)  (4,887.3)  (4,938.7)  (4,549.0)  (4,850.8) Adj. EBITDA   1,351.6  2,242.6  2,897.6  3,117.1  3,298.9

Other operating income/(costs)   0.0  0.0  0.0  0.0  0.0 Adj. EBIT   821.2  1,705.2  2,314.2  2,537.1  2,718.9

Operating expenses   (4,202.2)  (4,887.3)  (4,938.7)  (4,549.0)  (4,850.8) Adj. net profit   607.1  1,123.8  1,607.4  1,675.6  1,799.7

EBITDA   1,351.6  2,242.6  2,897.6  3,117.1  3,298.9

Depreciation   (530.4)  (537.5)  (583.5)  (580.0)  (580.0) Gross margin   24.3  31.5  37.0  40.7  40.5

Impairment   0.0  0.0  0.0  0.0  0.0 EBITDA margin (%)   24.3  31.5  37.0  40.7  40.5

Share of JV and ass. companies   30.1  57.6  38.9  30.0  30.0 Adj. EBITDA margin   24.3  31.5  37.0  40.7  40.5

Other   293  63  (204)  (371)  (401) EBIT margin (%)   20.6  25.6  27.4  28.6  28.8

EBIT   1,144.7  1,826.2  2,149.4  2,196.2  2,347.6 Adj. EBIT margin   14.8  23.9  29.5  33.1  33.4

Interest expense   (7.0)  (135.8)  (121.0)  (152.8)  (152.8) Net profit margin   17.4  18.8  21.0  21.9  22.1

Net interest   (7.0)  (135.8)  (121.0)  (152.8)  (152.8) Adj. net profit margin   10.9  15.8  20.5  21.9  22.1

Other   0.0  0.0  0.0  0.0  0.0

Pre-tax profit   1,137.7  1,690.3  2,028.5  2,043.4  2,194.8 Revenue growth (%)   18.3  28.4  9.9  (2.2)  6.3

Income tax   (173.6)  (346.0)  (379.0)  (367.8)  (395.1) EBITDA growth (%)   26.6  65.9  29.2  7.6  5.8

Net income   964.0  1,344.3  1,649.4  1,675.6  1,799.7 EBIT growth (%)   65.6  59.5  17.7  2.2  6.9

Net profit growth   108.5  39.4  22.8  1.6  7.4

Equity holders of the parent   964.0  1,343.3  1,649.4  1,675.6  1,799.7

Revenue per share   94.0  120.7  132.6  129.7  137.9

Adj. EPS   10.3  19.0  27.2  28.4  30.5

DPS   5.1  10.0  11.0  12.0  12.0

10
Balance Sheet  

Balance Sheet  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e Balance Sheet  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e

Property, plant and equipment   4,888.8  5,647.2  6,499.7  7,319.7  7,689.7 Equity attributable to the parent   9,347.5  10,395.8  11,475.9  12,501.5  13,592.2

Right-of-use assets   0.0  0.0  0.0  0.0  0.0 Non-controlling interests   0.0  0.0  0.0  0.0  0.0

Intangible assets   4,495.7  4,508.7  4,508.7  4,508.7  4,508.7 Total equity   9,347.5  10,395.8  11,475.9  12,501.5  13,592.2

Share of JV, ass. comp. and other inv.   674.7  1,008.8  1,098.0  1,098.0  1,098.0

Interest bearing assets   0.0  0.0  0.0  0.0  0.0 Long-term interest-bearing debt   2,880.7  3,736.6  3,743.0  3,743.0  3,743.0
Deferred tax assets   0.0  0.0  0.0  0.0  0.0 Non-current lease liabilities   0.0  0.0  0.0  0.0  0.0
Other non-current assets   0.0  0.0  0.0  0.0  0.0 Deferred tax liabilities   1,590.0  1,825.9  1,811.8  1,811.8  1,811.8

Total non-current assets   10,059.2  11,164.6  12,106.4  12,926.4  13,296.4 Other non-current liabilities   3.2  0.0  0.0  0.0  0.0

Total non-current liabilities   4,474.0  5,562.5  5,554.8  5,554.8  5,554.8

Inventories   3,157.6  4,012.8  4,357.4  4,482.4  4,632.4

Receivables   902.2  977.0  1,142.4  1,322.7  1,395.2 Short-term interest-bearing debt   87.7  106.2  76.7  76.7  76.7
Other current assets   0.0  7.5  6.0  6.0  6.0 Current lease liabilities   0.0  0.0  0.0  0.0  0.0
Cash and cash equivalents   509.2  719.6  288.3  48.9  533.0 Current tax assets   0.0  0.0  0.0  0.0  0.0

Total current assets   4,569.0  5,716.9  5,794.0  5,860.0  6,566.6 Other current liabilities   4.6  0.0  0.0  0.0  0.0

Total current liabilities   806.7  923.2  884.7  805.0  851.0

Total assets   14,628.2  16,881.6  17,900.4  18,786.3  19,863.0

Total equity and liabilities   14,628.2  16,881.6  17,915.4  18,861.3  19,998.0

Gross debt   2,968.4  3,842.9  3,819.8  3,819.8  3,819.8

Net interest bearing debt   2,459.2  3,123.3  3,531.5  3,770.9  3,286.8

NIBD and lease liabilities   2,459.2  3,123.3  3,531.5  3,770.9  3,286.8

Capital employed   11,806.8  13,519.1  15,007.4  16,272.4  16,879.0

Working capital   3,340.8  4,180.3  4,697.8  5,082.8  5,259.4

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Cash Flow Statement  

Cash Flow Statement  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e Cash Flow Statement  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e

Net profit   964.0  1,343.3  1,649.4  1,675.6  1,799.7 Free cash flow to firm   19.3  83.1  399.5  563.4  1,345.9

D,A&I   530.4  537.5  583.5  580.0  580.0 Free cash flow to equity   416.9  682.6  221.3  410.6  1,193.1

Change in working capital   (174.4)  (509.5)  (500.0)  (385.0)  (176.6)

Cash flow from JV's and Associates   (30.1)  (57.6)  (38.9)  (60.0)  (60.0)

Other operating cash flow items   (165.4)  (111.8)  (15.4)  0.0  0.0

Cash flow from operations   1,124.6  1,201.9  1,678.5  1,810.6  2,143.1

Capital expenditures   (1,112.2)  (1,254.6)  (1,400.0)  (1,400.0)  (950.0)

Net financial investments   0.0  0.0  0.0  0.0  0.0

Net acquisitions/divestments   0.0  0.0  0.0  0.0  0.0

Other investment items   0.0  0.0  0.0  0.0  0.0

Cash flow from investing activities   (1,112.2)  (1,254.6)  (1,400.0)  (1,400.0)  (950.0)

New debt   404.6  735.4  (57.3)  0.0  0.0

Repayment of debt   0.0  0.0  0.0  0.0  0.0

Change in debt   404.6  735.4  (57.3)  0.0  0.0

Dividend payment   (215.9)  (304.0)  (590.9)  (649.9)  (709.0)

Other financing items   (158.8)  (168.2)  (61.8)  0.0  0.0

  -  -  -  -  -

Other (e.g. FX)   0.0  0.0  0.0  0.0  0.0

Net cash flow   12.3  (52.7)  278.5  410.6  1,193.1

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Key ratios & Valuation  

Key ratios & Valuation  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e Key ratios & Valuation  (DKKm)   Dec-21  Dec-22  Dec-23e  Dec-24e  Dec-25e

Avg. shares outstanding (m)   59.1  59.1  59.1  59.1  59.1 FCFF yield   --  --  --  --  --

Avg. diluted shares outstanding (m)   59.1  59.1  59.1  59.1  59.1 FCFE yield   1.0  1.6  0.5  1.0  2.8

EV   28,633.3  29,061.7  29,325.1  29,479.6  29,167.2 ROE   10.7  13.6  15.1  14.0  13.8

NIBD / EBITDA (x)   1.8  1.4  1.2  1.2  1.0 ROACE   10.1  14.4  15.1  14.0  14.2

IBD / EBITDA (x)   2.2  1.7  1.3  1.2  1.2 EV / Sales   5.3  4.2  3.9  4.0  3.7

IBD / (EBITDA - capex) (x)   12.4  3.9  2.6  2.2  1.6 EV / adj. Sales   35,059.2  37,299.4  38,413.9  38,483.2  38,482.7

IBD / Total assets   20.3  22.8  21.3  20.3  19.2 EV / EBITDA   21.8  13.5  10.6  9.9  9.2

Operating cash flow / IBD   37.9  31.3  43.9  47.4  56.1 EV / adj. EBITDA   21.8  13.5  10.6  9.9  9.2

Free cash flow / IBD   0.7  2.2  10.5  14.7  35.2 EV / EBIT   25.8  16.5  14.2  14.0  12.9

EBITDA / Interest (x)   192.5  16.5  24.0  20.4  21.6 EV / adj. EBIT   35.9  17.7  13.2  12.1  11.2

EBITDA / (Interest+Amortisation) (x)   192.5  16.5  24.0  20.4  21.6 P/E   28  20  16  16  15

Equity / total assets   63.9  61.6  64.1  66.5  68.4 P/E adj.   44.55  24.07  16.83  16.14  15.03

P/BV   2.9  2.6  2.4  2.2  2.0

Earnings yield   2.3  3.2  3.9  4.0  4.3

Dividend yield   1.1  2.2  2.4  2.6  2.6

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Disclaimer

Arctic Securities AS (“Arctic”)

Arctic’s business in general, as well as the reports it prepares, is subject to supervision by the Norwegian Financial Supervisory Authority (No: “Finanstilsynet”). Arctic aims always to operate in compliance with appropriate business principles, including Business Standard No. 3 of 6 September 2005
of the Norwegian Securities Dealers Association (No: “Verdipapirforetakenes Forbund”), regarding handling of conflicts of interests and the content of reports produced by investment companies and other relevant standards.

Authors’ independence/Analyst certification

This report has been produced by Arctic in respect of the company(ies) mentioned in the table below (the “Company(ies)”). The authors of this report hereby confirm that notwithstanding the existence of any potential conflicts of interests referred to herein, the views in this report accurately reflect our
personal views about the Company(ies) and any securities analyzed herein. The authors of this report confirm that we have not been, nor are or will be, receiving direct or indirect compensation in exchange for expressing any of the views or the specific recommendations contained in the report, and
confirm that none of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The authors of this report are eligible to remuneration from Arctic’s general bonus scheme.

Basis and methods for assessment

Recommendations in respect of shares, bonds and related instruments are based on estimates using various standard valuation methods. These methods include analysis of earnings multiples, discounted cash flow calculations, net asset value assessments, credit figures, peer valuation, recovery
valuation and qualitative assessment of credit profiles.

Recommendation Structure Equity

Arctic’s research department operates with 3 recommendation categories based on the expected relative return within 6 to 12 months:

Buy The return is estimated to be considerably in excess of the applicable sector/market index return.

Hold The return is estimated to be more or less in line with the applicable sector/market index return.

Sell The return is estimated to be considerably less than the applicable sector/market index return.

Recommendation Structure Bonds

Arctic’s research department uses 3 recommendation categories for bonds based on the expected relative return within 6 to 12 months:

Outperform The bond is currently trading at a wider credit spread than the applicable credit index for the relevant rating category.

Market perform The bond is currently trading at a credit spread in line with the applicable credit index for the relevant rating category.

Underperform The bond is currently trading at a tighter credit spread than the applicable credit index for the relevant rating category.

Please find a list of all research linked to financial instruments or issuers that Arctic has prepared during the past 12 months on www.arctic.com.

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Risk of investment - general

There is risk attached to all investments in financial instruments. The opinions contained herein are based on numerous assumptions as described in this document. Different assumptions could result in materially different results. Furthermore, the assumptions may not be realized. This document
does not provide individually tailored investment advice and all recipients of this document are advised to seek the advice of a financial advisor before deciding on an investment or an investment strategy.

Prevention and avoidance of conflicts of interests

This report has been prepared by Arctic’s research department, which is separated from the corporate finance department in order to control the flow of information. All employees of Arctic are subject to duty of confidentiality towards clients and with respect to handling inside information.

Investment services provided to the Company(ies)

Arctic may have received assignments from the Company(ies), that are not publicly known and that due to professional secrecy we are currently obliged not to reveal. The table below shows which investment banking services Arctic has provided to the Company(ies) and whether Arctic has received
compensation for investment banking services from the Company(ies) in the previous twelve months.

Company(ies) General investment Placement of shares bonds 2) IPO 3) Market maker 4) Compensation 5) No investment No compensation 7)
banking services 1) banking services 6)
Bakkafrost Pf - - - - - X X

1. Arctic has provided general investment banking services to the Company in the previous twelve months.

2. Arctic has acted as financial advisor in connection with a placement of shares or bonds of the Company in the previous twelve months.

3. Arctic has acted as financial advisor in connection with an IPO of the Company in the previous twelve months.

4. Arctic has acted as market maker for the Company in the previous twelve months.

5. Arctic has received compensation for investment banking services from the Company in the previous twelve months.

6. Arctic has not provided any investment banking services to the Company in the previous twelve months.

7. Arctic has not received compensation for investment banking services from the Company in the previous twelve months.

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Ownership of shares or bonds issued by the Company(ies)

Arctic may have holdings in the Company(ies) as a result of proprietary trading, market making and/or underlying shares as a result of derivatives trading. Arctic may buy or sell such shares both for its own account as a principal or as an agent. The table below shows the positions of the analyst(s)
who is/are authors of this report and whether Arctic alone, or together with its affiliates or subsidiaries hold a net short or long position exceeding 0.5 % of the total issued share capital of the Company(ies).

Company(ies) Analyst shares 1) Analyst bonds 2) Net short position 3) Net long position 4)
Bakkafrost Pf - - - -

1. Number of shares owned by the analysts who are authors of the parts of the report concerning the mentioned Company.

2. Number of bonds owned by the analysts who are authors of the parts of the report concerning the mentioned Company.

3. The size of the position if Arctic alone, or together with its affiliates or subsidiaries hold a net short position exceeding 0.5 % of the total issued share capital of the mentioned Company.

4. The size of the position if Arctic alone, or together with its affiliates or subsidiaries hold a net long position exceeding 0.5 % of the total issued share capital of the mentioned Company.

Date Recommendation Target (NOK) Price (NOK)

10 May 2023 Buy 800.0 709.5

9 May 2023 Hold 750.0 705.0

21 February 2023 Hold 650.0 650.0

3 January 2023 Hold 600.0 593.5

7 November 2022 Buy 560.0 494.8

17 October 2022 Buy 580.0 496.8

23 August 2022 Buy 670.0 605.0

8 August 2022 Hold 700.0 654.0

10 May 2022 Hold 700.0 624.0

The relationship to other reports prepared by Arctic regarding the Company(ies)

The graph(s) below show the historical share price and how our recommendation(s) for the financial instruments issued by the Company(ies) have changed over the last 12 months.

The part of this report concerning Bakkafrost Pf has been prepared by Axel Jacobsen, Axel Peter Glede Collett

Planned Updates

There is no fixed schedule for updating. However, Arctic aims to update the recommendation on a company when:

● The price target is achieved/large change in credit spread,

● New accounting figures are released, or
● Any material news on a company or its industry is released.

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Limitation of liability

This report does not constitute or form any part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any securities; nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever.

This report is based on publicly available information only. All information, including statements of fact, contained in this report has been obtained and compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made by Arctic
with respect to the completeness or accuracy of its contents, and it is not to be relied upon as authoritative and should not be regarded as a substitute for the exercise of a reasoned and independent judgement by you. Arctic accepts no liability whatsoever for any direct or consequential loss
arising from the use of this report or its content.

Jurisdiction, reproduction etc.

This report is governed by and to be construed solely in accordance with Norwegian law. It may not be reproduced, redistributed or republished by any recipient for any purpose or to any person. If you are not a client of Arctic, you are not entitled to receive this research report.

Distribution in the United States

Arctic Securities LLC takes responsibility for this research report. Research reports are prepared by Arctic for information purposes only. Arctic and its employees are not subject to the Financial Industry Regulatory Authority’s (“FINRA’s”) research analyst conflict rules. Arctic research reports are
intended for distribution in the United States solely to "major U.S. institutional investors" as defined in Rule 15a-6 under the United States Securities Exchange Act of 1934, as amended. Each major U.S. institutional investor that receives a copy of an Arctic research report by its acceptance thereof
represents and agrees that it shall not distribute or provide copies to any other person. Any U.S. person receiving these research reports that desires to effect transactions in any securities discussed within the report should call or write Arctic Securities LLC, an affiliate of Arctic, at 212-597-5541, One
Rockefeller Plaza, Suite 1706 N.Y., N.Y. 10020. Arctic Securities LLC is a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the FINRA and the Securities Investor Protection Corporation.

This report does not provide individually tailored investment advice or offer tax, regulatory, accounting or legal advice. Prior to entering into any proposed transaction, recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic
risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of the transaction. Financial statements included in the report, if any, may have been prepared in accordance with non-U.S. accounting standards that may not be comparable to the financial
statements of United States companies. It may be difficult to compel a non-U.S. company and its affiliates to subject themselves to U.S. laws or the jurisdiction of U.S. courts.

Prices and all other information herein are believed to be reliable as of the date on which this report was issued. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to
information concerning Arctic, its subsidiaries and affiliates, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. Arctic is under no obligation to update or keep current the information contained herein.

For debt research reports please note:

This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This report may not be independent of Arctic’s proprietary interests. Arctic trades the securities covered in this
report for its own account and on a discretionary basis on behalf of certain clients. Such trading interests may be contrary to the recommendation(s) offered in this report.

Distribution in Brazil

Arctic is represented in Brazil through its representative office Arctic Brasil Escritório de RepresentaÇÃo Ltda. Arctic is not registered with the Brazilian Securities Commission (Comissão de Valores Mobiliários, the CVM). The securities discussed herein have not been and will not be publicly issued,
placed, distributed, offered or negotiated in the Brazilian capital markets and, as a result, have not been and will not be registered with the CVM. Therefore, Arctic represents, warrants and agrees that it has not offered or sold, and will not offer or sell the securities in Brazil, except in circumstances
which do not constitute a public offer, placement, distribution or negotiation of securities under the Brazilian capital markets regulation.

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Distribution in Canda

This report is not, and under no circumstances is to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of the securities described herein in Canada or any province or territory thereof. No securities commission or similar regulatory authority in Canada has
reviewed or in any way passed upon this report, the information contained herein or the merits of the securities described herein and any representation to the contrary is an offence. Under no circumstances is this report to be construed as an offer to sell securities or as a solicitation of an offer to buy
securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will be made in accordance with applicable Canadian law and under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer
registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made.

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Norway Sweden Germany USA Brazil

Arctic Securities AS Arctic Securities AS Arctic Securities AS Arctic Securities LLC Arctic Brasil Escritório de
Haakon VIIs gate 5 Sweden Branch Germany Branch 45 Rockefeller Plaza, representação Ltda
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Tel +47 21 01 31 00 Tel +46 844 68 6100 Tel +49 151 67 52 17 45 Tel +1 (212) 597 5556 Tel +47 21 01 31 00

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