Solid operations, proper capital allocation

Energy Morning - 31 October 2024

Aker Solutions (Hold, TP: NOK48.00) - Small SOTP discount removed

Having repeatedly said a capital allocation strategy update would be provided with the Q4 results, it surprised the market by announcing a dividend of NOK21/share (46% of market cap) prior to the Q3 results, effectively meaning all liquid investments are to be distributed. We expect focus to be on the value of ‘the stub’, its 20% OneSubsea stake and proper working capital adjustments. As our SOTP had a 5% discount on the items now being distributed, we have increased our target price to NOK48 (46), while we reiterate our HOLD.

Tokmanni (Hold, TP: EUR11.00) - Neutral ahead of Q3

We are close to consensus Q3 clean EBIT, reflecting lower YOY profitability for Tokmanni Finland and soft demand for the group’s key categories. We continue to see downside risk to its 2024 guidance and struggle to get excited about Tokmanni after a series of quarters with negative LFL traffic KPIs (including DollarStore) and underperformance versus the market. We reiterate our HOLD but have cut our target price to EUR11 (12), after small estimate cuts.

SpareBank 1 Sør-Norge (Buy, TP: NOK160.00) - Strong final pre-merger quarter

With a NOK452m gain from the merger of Fremtind and Eika Forsikring, but a NOK105m writedown in Folkeinvest and NOK64m of merger-related costs, the bank reported a strong Q3 ROE of 17.5% (13.6% adjusted). While loan losses were a somewhat elevated ~22bp, NII increased 2.4% QOQ. From an 18.3% end-Q3 pro forma CET1 ratio, it guided for a ~10bp benefit in Q4 (sale of SamSpar shares), ~40bp in Q1 (Basel IV) and another ~70bp in 2025 (IRB models). With the stock trading at a 2025e P/E of ~9.8x and longer-term synergy potential, we continue to find the valuation attractive. We reiterate our BUY and ...

The weekly navigator

From the past week, we highlight: 1) VNV Global wrote down its unlisted portfolio by 3% QOQ in its Q3 report, as its Gett sale remains under regulatory review; 2) starting in this issue, we include Spiltan Invest in our sector overview (SEK9.2bn NAV with the key asset being Paradox Interactive); and 3) Latour is set to report Q3 results next week.