NRC Group (Hold, TP: NOK16.00) - A waiting game
The Q4 results were weak, as guided in January’s profit warning, and with the 2021 guidance for an EBITA margin of 1.75–2.50%, NRC looks unlikely to return to profitability before Q2 2022 at the earliest, which is not reported possibly until August 2022. Given its history of profit warnings and lowering its guidance, while we view the stock as a recovery case with significant potential for a re-rating if it returns to profitability, we believe the risk of bank covenant breaches remains high. We have cut our target price to NOK16 (20); however, following the recent weak share price, we have upgraded to HOLD (SELL).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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