Sea1 Offshore (Buy, TP: NOK35.00) - Solid backlog coverage
With EBITDA and net debt pre-announced, we see limited room for surprises in the full Q4 report. Sea1 Offshore’s backlog coverage remains among the best in the sector, and we calculate a firm EBITDA backlog of cUSD550m, (covering 82% of its current EV) and cUSD1bn including options. We expect the company to continue prioritising shareholder distributions and that it will seek alternative financing options for the newbuilds, but we also see current liquidity and FCF generation sufficient to cover pre-delivery instalments. We reiterate our BUY but have cut our target price to NOK35 (42) following the NOK7 extraordinary DPS.
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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