Prosafe (Hold, TP: NOK7.50) - Fairly valued
We are 7% below consensus EBITDA ahead of the Q3 report (due 5 November), driven by lower revenues but partly offset by lower costs. On the pending potential merger with Floatel, we expect limited news. With few near-term development projects in the North Sea and only a few contract opportunities in Brazil, we expect slow demand in the next few years and that it will take time for a market improvement that could justify upside to the current valuation. We maintain our HOLD, while we have lowered our target price to NOK7.5 (10).Prosafe is a supplier of products and services in selected niches of the global oil and gas industry, specifically in the high end of the global offshore accommodation/service industry. Co.'s operations comprise a parent company and the business division Offshore Support Services, a global owner and operator of semi-sumbersible accommodation/service rigs. Co. owns 11 of 16 available units. These rigs serve charters with five units in the North Sea, five units in the Gulf of Mexico, and one unit in the Philippines. In addition, the division owns one jack-up accommodation/service rig.
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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