Subsea 7 (Hold, TP: NOK120.00) - Potential for a decent Q4
With multiple larger projects (Catcher, Maria and Atoll) close to completion or already completed in Q4, we believe there is decent potential for flush-out profits compared to the weak Q3 results. Hence, we forecast Q4 EBITDA of USD277m, above consensus of USD211m. Longer-term, we are more cautious on the stock due to too-high 2019 consensus. We also believe consensus for new orders fails to incorporate that both volumes and unit pricing are significantly down from 2010–2014. Still, due to the recent weak share price performance, we have upgraded to HOLD (SELL), while our target price is adjusted to NOK120 (115).Subsea 7 is a provider of seabed-to-surface engineering, construction and services contractor to the offshore energy industry. Co. provides products and services required for subsea field development, including project management, design and engineering, procurement, fabrication, survey, installation, and commissioning of production facilities on the seabed and the tie-back of these facilities to fixed or floating platforms or to the shore. Co. also provides products and capabilities to deliver full Life of Field services to its clients. Through its i-Tech Division, Co. provides remotely operated vehicles and tooling services to support exploration, production and drilling activities.
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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