Subsea 7 (Buy, TP: NOK180.00) - While waiting for a better H2
We forecast Q2 EBITDA of USD163m, just above company-compiled consensus of USD159m. We still expect gradual improvements in earnings as legacy contracts roll off; we forecast 40–30% YOY EBITDA growth for 2024–2025e, supported by a backlog already back at the 2014 level and a solid outlook for the subsea industry. The share price has gained momentum recently and is up 18% since Q1 earnings, but is still lagging behind peer TechnipFMC, which is up c30% in the same period, and we continue to find Subsea 7’s valuation attractive at a 2-year forward EV/EBITDA of 4.2x. 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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