Aker Solutions (Hold, TP: NOK40.00) - Larger SOTP discount warranted
While underlying operations keep doing well, our out-of-consensus concern on working capital unwind and lack of cash flow looks to be unfolding at an even greater magnitude and faster pace in 2024e. Also, we believe it will struggle to meet its 2024–2027 cash flow guidance. With limited clarity on OneSubsea JV financials, investors likely lack conviction to value the stake above transaction value. Lastly, investing surplus cash in fixed income securities is not what shareholders want, in our view. We reiterate our HOLD, but have reduced our target price to NOK40 (47), applying a larger SOTP discount on lack of cash flow and ‘trapped cash’, and likely guidance cut.Aker Solutions is a provider of products, systems and services to the oil and gas industry. Through its subsidiaries, Co. is engaged in the field of engineering, design and technology aimed at improving production and recovery. Co. has 3 reportable segments which are the strategic business units of the group: Engineering Solutions (provides concept and front-end studies to oil companies), Product Solutions (delivers oilfield products for the entire upstream value chain, from reservoir through processing), and Field-Life Solutions (offers a range of services, which has the ultimate objective to increase oil and gas recovery from existing fields and extend the operating life of field assets).
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.