Northern Drilling (Buy, TP: NOK90.00) - Discount to breakup value
Assuming USD505m/harsh semi (supported by recent transactions), the company is trading at an implied value of USD291m/drillship, below its USD296m acquisition cost. Compared to peers, adjusting for assumed start-up costs, flexible delivery benefits, age and technical specifications, we believe it should trade at NOK81/share (10% upside from current NOK73.4 share price). We maintain our BUY and NOK90 target price.
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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