Archer (Buy, TP: NOK5.00) - Optionality likely to be extended
Although the refinancing is not fully concluded, management said an “amend and extend†solution with lenders was in its closing stages. We estimate a 2020 net debt/EBITDA of 5.4x and enough cash flow for 2020–2021 to cover interest costs and even some debt amortisation. The current capital structure and option-like valuation (market cap is 8% of the EV) should result in a boost for the equity if the debt maturities are extended without new equity, which is likely in our view. We reiterate our BUY and NOK5 target price, supported by our SOTP of NOK6.5.
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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