Shelf Drilling (Buy, TP: NOK65.00) - Q2e hit by delayed start-up
We expect Q2 adj. EBITDA of USD36.7m, slightly below Bloomberg consensus of USD39.7m, as our estimates reflect Adriatic not commencing its Nigeria contract as planned. With 2019e and early 2020e cash flow burdened by start-up costs, investors should focus on the outer years (2021), for which we estimate a cash flow yield to market cap of 22%. We reiterate our BUY and NOK65 target price, corresponding to a 2021e adj. EV/EBITDA of 7.0x.
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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