Aker BP (Buy, TP: NOK292.00) - In the DPS we trust; 10% 2021e yield
We have cut our 2019–2021e EPS by 12–22% on lower oil price estimates. The shares are trading at attractive levels on the guided 2020e and 2021e dividend yields of 9% and 10%, respectively, which we believe highlight investor concerns about the dividend’s sustainability. With strong production growth and free cash flow coverage post the capex period, we forecast a leverage ratio below its 1.5x NIBD/EBITDAX target at a USD60/bbl oil price. We maintain our BUY, but have cut our target price to NOK292 (320).Aker BP ASA engages in the exploration, development, and production of petroleum resources on the Norwegian Shelf. In addition, Co. has a separate Johan Sverdrup business unit to manage its interest.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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