Chr. Hansen A/S (CHR) rose the most in seven weeks in Copenhagen trading after Societe Generale SA said the new chief executive officer of the world’s biggest maker of dairy enzymes will return cash to shareholders.
Chr. Hansen rose as much as 3.4 percent, the most since April 2. The stock gained 1.9 percent to 207.70 kroner at 9:53 a.m. in the Danish capital, making it the second-biggest winner on the Nasdaq OMX Copenhagen 20 index. (KFX) Trading volume on the share was 22 percent of the three-month daily average.
Chr. Hansen, which ended an 80 million-euro ($104 million) share buyback program last year, hired Cees de Jong to take over as chief executive officer on April 1 after Lars Frederiksen resigned. Societe Generale said today de Jong has told investors at roadshow presentations that he favors returning excess cash to shareholders rather than chasing mergers and acquisitions.
“With gearing low, cash generation robust and little likelihood of material M&A, we expect 90 percent of ongoing free cash flow to be returned to shareholders,” Alex Sloane and Warren Ackerman, London-based analysts with Societe Generale, said in a note.
The bank raised today its recommendation on the stock to buy from hold and increased a price estimate to 245 kroner from 205 kroner. Chr. Hansen’s profitability will improve as innovation drives enzymes sales higher, the company completes a turnaround of its color unit, and new production facilities in Denmark open, Sloane and Ackerman said.
Before today, Chr. Hansen shares had lost 4 percent since the Hoersholm, Denmark-based company on April 11 reported second-quarter earnings that missed analyst estimates. That compares with a 2.7 percent gain in the C20 index in the same period.
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