Frontline (Buy, TP: NOK81.00) - Lower dividend forecast
We reiterate our BUY but have lowered our target price to NOK81 (NOK97), as we now apply no premium to our 1-year forward NAV (down from 20%), assuming a VLCC resale value of USD99m and VLCC rate of USD40k/day (calendar year). We have applied a lower discount as we assume a 50% (90%) 2020e payout ratio due to coronavirus uncertainty as there is a growing risk of a larger OPEC cut than the 0.5mbpd we assumed in our 7 February sector note due to the virus.
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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