Dolphin Drilling (Buy, TP: NOK15.00) - 3-rig scenario looks set to unfold
With the Borgland securing a Letter of Award (LOA) offshore India, Dolphin Drilling is set to have three operational rigs from H2 2024, de-risking future earnings and cash flow generation. Key for the equity story in our view is timely and cost-efficient reactivation of the Borgland, timely payments in Nigeria for the Blackford after the working capital build-up in Q2, and a long-term strategy for returning capital to shareholders. We forecast solid cash flow generation from 2025, with a 2025 yield to equity of 20% and EV/EBITDA of 2.0x. We reiterate our BUY and NOK15 target price, which implies an EV/EBITDA of 4.7x for 2024e and 3.4x for 2025e.
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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