NRC Group (Buy, TP: NOK86.00) - Weak Q3, but the trains keep rolling
Q3 EBIT was 13% below our forecast adjusted for M&A costs (NOK18m in write-downs in SBB – acquired in Q1 2017 for SEK115m). While the other 14 acquisitions continue to perform well, the game-changer is set to be VR Track; the deal is still pending, but we calculate it would add cNOK3.67bn to the NOK3.35bn order backlog in Q1 2019e. NRC’s P/E valuation remains attractive, but we have trimmed our target price to NOK86 (NOK90) for updated peer multiples. Our recommendation remains BUY.NRC Group collects, processes and sells map data. Co. provides services to the Norwegian market, but focuses mainly on projects abroad. Co.'s geo server, BlomURBEX®, enables online distribution of Co.'s products and databases to its customers. The content of BlomURBEX® consists of Co.'s oblique aerial images, TerraItaly® database and 3D city models. Co.'s operations are divided into two main business areas: Blom Geo Engineering Services, which collects and produces geographic information; and Blom Information Services, which provides geographic information as standardized services or through applications adapted to various uses and platforms.
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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