Archer (Sell, TP: NOK3.00) - An option on 2022/23 refinancing
Although management has improved operations in the North Sea and created a sustainable business, we still see volatility for its Argentina exposure. From an equity perspective, it remains highly leveraged (for an asset-light company), with 2021e net debt to EBITDA of 5.3x. Although it generates positive cash flow, we consider its debt unsustainable as 2021 guidance implies c20 years to repay it. Hence, we consider the equity to be a long-dated option on market recovery and that the refinancing required in 2022/2023 is non-dilutive. With equity 13% of the EV, we have downgraded to SELL (HOLD), with a NOK3 (2) target price, implying 5.9x 2021e EV/EBITDA.
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.