OKEA (Hold, TP: NOK20.00) - No dividends, no glory
Despite a solid Q4, with EBITDAX above our estimate by 8% (no reliable consensus), we believe the results were overshadowed by the company lacking intention to restart paying dividends. Factoring in management’s comments, we do not expect OKEA to pay dividends until 2027, when Bestla is scheduled to commence production, which in our view makes the equity case less appealing compared with its NCS peers that are yielding >10%. We have downgraded OKEA to HOLD (BUY) and have cut our target price to NOK20 (27), as we believe the company will continue trading at a significant discount to NAV (40%) until cash is returned to shareholders.Okea ASA is a Norway-based oil company engaged in the oil and gas exploration and production industry. The Company contributes to the value creation on the Norwegian continental shelf with development and operation systems through the utilization of the result of previous and ongoing exploration activities in order to bring undeveloped oil on stream in strategic cooperation with service companies. Its services do not involve the exploration for petroleum. The Company operates an office in Trondheim, Norway.
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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