Earnings risk too high in 2018
We are in line with consensus for Q3e, and expect most focus in the report to be on the backlog and cost-cutting. Given what we believe has been a large backlog reduction, we see high earnings risk in Q4 and 2018 as we are 28% below consensus 2018e EBITDA after further cost-cutting. With the combination of a premium valuation, balance-sheet risk, and too-high consensus expectations for a recovery, we maintain our SELL recommendation and NOK13 target price.Southern Gas Trading Joint Stock Company, formerly Petrovietnam Southern Gas Joint Stock Company, is a Vietnam-based company engaged in the trading of liquefied petroleum gas (LPG). Its products include LPG cylinders of 12 and 45 kilograms for household usage, along with industrial storage tanks for manufacturing activities. It also trades compressed natural gas (CNG), petroleum, lubricants, fertilizers and supplies for the gas industry. The Company provides transportation and warehousing services of petrochemicals, as well as construction services of petroleum and gas facilities. During the year ended December 31, 2011, sale of LPG contributed to 73.37% of the Company's total revenue.
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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