Scatec (Sell, TP: NOK70.00) - Growth expectations still too high
Although Scatec has cut its growth target significantly, we see a funding gap of 50% for the new target of investing NOK10bn of equity for growth until 2027. This is equivalent to 38% of the company’s market cap. We believe it will have to fund most of this by approaching the equity capital markets, which would dilute existing shareholders. As we see less liquidity available for growth, we have cut our growth estimates by 30%. We reiterate our SELL, and have cut our target price to NOK70 (81), which reflects only the growth we believe the company can generate with recycled capital.
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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