Small Cap Miner – August 2024

2020 Bulkers (Sell, TP: NOK118.00) - Premium exposure, downside risk

2020 Bulkers continues to offer premium dry bulk exposure, with an 18% run-rate yield on July DPS. However, the company’s pricing remains closely tied to its NAV, which is underpinned by asset values at 15-year highs that are not supported by current freight markets. Hence, we believe risk is largely skewed to the downside, with asset values most likely to converge lower, reflecting what we view as a fragile situation ahead. We reiterate our SELL and have cut our target price to NOK118 (149).

100% spot into the high season

A. P. Møller Mærsk (Hold, TP: DKK11500.00) - Likely topping out in Q3

While the Q3 results posted a ~USD1bn beat to our and consensus expectations likely due to stronger container shipping markets, we believe the implications for long-term estimates are limited, as its updated guidance indicates a ~USD2bn QOQ decline for Q4. Hence, the Q3 beat on a stand-alone basis would add up to 4% to the market cap, all else equal.

Elisa (Hold, TP: EUR48.00) - sedApta acquisition neutralised Q3

The Q3 report was on the weak side, in our opinion, with revenues 3% below consensus. We have trimmed our underlying estimates, which is offset by the acquired sedApta business. We reiterate our HOLD and EUR48 target price.

Smartoptics (Buy, TP: NOK21.00) - Set for return to growth

We are seeing early signs of recovery in Smartoptics’ markets following a challenging downcycle, and see a plausible path to revenue growth for the company from Q4. While we have made material cuts to our estimates, we continue to like the story on our view of an approaching upcycle in optical networking equipment and what appears to be AI-induced growth in demand for bandwidth in DCI and enterprise networking. We reiterate our BUY and NOK21 target price.