Small revisions in the dividend machine

2020 Bulkers Minor model adjustments

We have updated our estimates following the Q3 results and latest business update. We continue to see significant risk to what we view as an imbalance between China’s excessive raw material imports and its underlying demand, showcased by ~5% growth in iron ore imports YTD being met by rapidly growing steel exports, with October up 41% YOY, while coal inventories are setting new highs. Bottom line, all else being equal, we calculate the current NAV/share would drop from NOK151 to NOK119 by applying current one-year TC rates and historical valuation multiples implying 17% downside potential to t...

Q3 as expected, unchanged outlook

EBITDA of USD 15m (ABGSCe and cons at USD 15m), Potential downside to Q4 estimates - balanced outlook, Share to trade in-line with peers

Edda Wind (Buy, TP: NOK30.00) - Well positioned

While EBITDA was broadly in line with expectations, the Q3 report gave early signs of improved operational reliability, which we believe will be key to narrowing the discount to underlying values (the stock is trading at 0.6x P/NAV). Recent contract awards (including a new 12+12-month contract announced with the results) have made the fleet fully booked until the 2025 summer season, and three of the four 2025 newbuild deliveries are now booked directly following yard delivery. We reiterate our BUY and NOK30 target price.

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Petrobras FPSO delays may hit service volumes but lengthen cycle

Being the largest global consumer of deepwater oil services, Petrobras’ strategic plans tend to get investor attention. On the positive side, its latest 5-year plan sees 5% higher E&P spending than the previous one, and has a more stable phasing between the years, which is supportive for the cycle duration. However, several FPSOs are facing significant delays, which is on the downside for oil services, leading to delays for deepwater oilfield services (primarily drilling and subsea), likely resulting in lower ‘peak volumes’ and demand being spread over a longer period. The rig count is said to...