Sparebanken Vest (Buy, TP: NOK158.00) - Long-term synergy potential

In this note, we have included the merger with Sparebanken Sør in our estimates (scheduled for 1 May 2025 pending regulatory approval). The banks have guided for annual operating synergies of NOK350m–400m from 2027–2028, as well as combined capital benefits of NOK4.1bn (NOK2.1bn from the new standard method and NOK2bn from SVEG’s IRB models). While we have cut our 2025–2026e EPS by ~5% due to the synergy time lag, we expect the merger to be accretive longer-term. Also seeing generous dividend prospects, we continue to find the valuation attractive at a 2025e P/E of 9.6x. We reiterate our BUY a...

Norwegian banks: Q3'24 outcome vs. expectations

Edda Wind (Buy, TP: NOK30.00) - Well positioned

While EBITDA was broadly in line with expectations, the Q3 report gave early signs of improved operational reliability, which we believe will be key to narrowing the discount to underlying values (the stock is trading at 0.6x P/NAV). Recent contract awards (including a new 12+12-month contract announced with the results) have made the fleet fully booked until the 2025 summer season, and three of the four 2025 newbuild deliveries are now booked directly following yard delivery. We reiterate our BUY and NOK30 target price.

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Petrobras FPSO delays may hit service volumes but lengthen cycle

Being the largest global consumer of deepwater oil services, Petrobras’ strategic plans tend to get investor attention. On the positive side, its latest 5-year plan sees 5% higher E&P spending than the previous one, and has a more stable phasing between the years, which is supportive for the cycle duration. However, several FPSOs are facing significant delays, which is on the downside for oil services, leading to delays for deepwater oilfield services (primarily drilling and subsea), likely resulting in lower ‘peak volumes’ and demand being spread over a longer period. The rig count is said to...