Subsea 7 (Buy, TP: NOK180.00) - Unexciting Q1e ahead
We forecast Q1 EBITDA of USD99m, below Bloomberg consensus of USD115m, but in line with company-compiled consensus of USD101m. We believe investors are prepared for a muted Q1 following recent company updates. Also, order intake is likely to be soft as announced oil & gas orders are seen at cUSD500m–600m. Orders are normally lumpy, and we expect an uptick later in the year with the conversion of pre-announced wind contracts and new O&G awards, where it is believed to be an exclusive bidder on some jobs. We see the current valuation as attractive at a 2-year forward EV/EBITDA of 3.8x, well below the historical average of 5.5x. We reiterate our BUY and NOK180 target price.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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