Entra (Hold, TP: NOK105.00) - May need NOK7bn–8bn in equity
In Q2, Entra wrote down its asset values by 3.1% QOQ on rising yields, but the operating result was 5% better than we expected. The company is open to selling more than the NOK5bn–6bn of assets previously guided to improve its LTV. However, our concern remains the interest coverage ratio (ICR), expecting it to fall towards 1.8x in 2024. We calculate it may need to raise NOK7bn–8bn in new equity, depending on asset sales, to improve the ICR to retain an investment grade (IG) rating. That said, we find the current EV fair, and reiterate our HOLD and NOK105 target price.Entra ASA (Entra) is a Norway-based real estate company. It is engaged in development, letting and management of energy efficient buildings. Its portfolio comprises over 100 buildings with a total area of more than 1.3 million square meters and focus on office real estate in central locations. Entra is also engaged in project and land development activities. Its business is organized into four segments (regions) around Norway's four largest cities: Central Oslo, Greater Oslo, Southern and Western Norway, and Central and Northern Norway. Its strategic areas of concentration include Oslo and surroundings, Bergen, Stavanger and Trondheim. The Company is focused on the public sector, which represents approximately 80% of Entra's customers and tenants. Its legal structure comprises more than 40 property companies and special purpose vehicles (SPVs), a property management company Papirbredden Eiendom AS, several joint ventures and Oslo S Utvikling AS, a property development company.
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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