Subsea 7 (Buy, TP: NOK105.00) - BUY on attractive valuation
We expect seasonality to help Subsea 7 to a decent Q2, reflected in our EBITDA of USD172m, above consensus of USD165m. While order intake YTD has been weak, and we believe is a growing investor concern (we estimate Subsea 7 has only received c10% of the USD value of global SURF orders), we see support for the shares in improved orders in H2 2019. However, we also expect growing focus on the PLSV rollovers in 2021–2022. While we are 12–18% below consensus on 2020–2021e adj. EBITDA, we believe Subsea 7 is attractively valued and have upgraded to BUY (HOLD), but trimmed our target price to NOK105 (110).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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