DOF (No_rec, TP: NOK) - Solid operations, but high leverage
We like DOF from an operational perspective, with its high-quality fleet and exposure to key offshore regions such as the North Sea and Brazil. We view Brazil in particular as an attractive region longer-term, where DOF has built up a strong position. However, with offshore E&P spending still trending down in 2018 and our view of a slow recovery, we believe an earnings recovery is still out in time. DOF also looks too leveraged to us, and with its market cap c5% of the EV, we consider the stock highly sensitive to the timing of a recovery. Hence, we initiate coverage with no target price and NO REC.DOF is the parent company in DOF's group of companies which owns and operates a fleet of supply and subsea vessels as well as having the engineering capacity to service the subsea market. Co. operates worldwide and provides services to the global oil and gas industry. Co. operates in three segments of the offshore service market. These are defined by types of activities and vessel types: Platform Supply Vessels, Anchor Handling Tug Supply Vessels and Subsea Vessels and Subsea Engineering. The subsea engineering activities among others comprise Survey and Positioning, Inspection, Repair and Maintenance Services, Construction Support, Diving Services and Mooring Projects.
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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