Shelf Drilling North Sea (Buy, TP: NOK45.00) - Benefiting from a better parent
With its 60% shareholder (Shelf Drilling) having completed comprehensive refinancing, we believe Shelf Drilling North Sea’s (SDNS) minority shareholders will indirectly benefit too. We expect SDNS to ultimately be fully or partly consumed by its parent, which is more realistic now Shelf Drilling (SHLF) has built balance sheet visibility. On our estimates, SDNS is trading at a significant discount to underlying values and peers. Bridging the gap in implied asset values to peers and its parent would imply c70% and 23% upside, respectively. We reiterate our BUY and NOK45 target price, reflecting a 25% discount to our NAV of NOK 60/share.
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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