Ørsted (Hold, TP: DKK390.00) - Balance sheet risk still in focus

Ørsted reported underlying results on the downside and further construction issues in the US. The reversal of cancellation fees and deferred capex helps near-term liquidity, but we still believe significant asset sales are needed to fix its balance sheet. We reiterate our DKK390 target price and have upgraded the stock to HOLD (SELL), as it is valued on a par with existing business and visible growth. However, we see uncertainty in the US and a weak balance sheet to continue to weigh on the stock.

Renewable Weekly – 11 November 2024

Cloudberry (Buy, TP: NOK13.00) - Backlog progressing as planned

The underlying Q3 results were slightly better than we expected on higher realised power prices and lower opex. Maturing its backlog seems to be progressing well, with a storage project and the Nees Hede solar project looking set for FID over the next quarters. We believe Cloudberry is fully funded for this and that future growth is likely to be partially financed by asset rotation. We have upgraded to BUY (HOLD) and maintain our NOK13 target price.

Edda Wind (Buy, TP: NOK30.00) - Well positioned

While EBITDA was broadly in line with expectations, the Q3 report gave early signs of improved operational reliability, which we believe will be key to narrowing the discount to underlying values (the stock is trading at 0.6x P/NAV). Recent contract awards (including a new 12+12-month contract announced with the results) have made the fleet fully booked until the 2025 summer season, and three of the four 2025 newbuild deliveries are now booked directly following yard delivery. We reiterate our BUY and NOK30 target price.

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Petrobras FPSO delays may hit service volumes but lengthen cycle

Being the largest global consumer of deepwater oil services, Petrobras’ strategic plans tend to get investor attention. On the positive side, its latest 5-year plan sees 5% higher E&P spending than the previous one, and has a more stable phasing between the years, which is supportive for the cycle duration. However, several FPSOs are facing significant delays, which is on the downside for oil services, leading to delays for deepwater oilfield services (primarily drilling and subsea), likely resulting in lower ‘peak volumes’ and demand being spread over a longer period. The rig count is said to...