SFL Corporation Ltd (Hold, TP: USD10.80) - Scales balanced on risk/reward
We see utilisation risk for Hercules potentially limiting quarterly DPS to cUSD0.15 on a cUSD30m annual cash burn, while we believe asset monetisation to cover the outstanding debt or realising a 70% utilisation on current market rates should defend the DPS. Coupled with a USD4.3bn backlog for a diverse asset mix against solid counterparties, we believe the risk is balanced. We reiterate our HOLD and USD10.8 target price.
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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