Subsea 7 (Hold, TP: NOK205.00) - Looking for clarity
While we see the rationale for combining the subsea segments of Subsea 7 and Saipem, dilution of the focused story in Subsea 7 is a risk through Saipem’s onshore E&C and offshore drilling exposure, and its more mixed operating track record. We see a risk of SOTP discount/multiples compression offsetting the positives (implied 10% relative premium and synergies). The key ahead could be clarity on possible spin-offs and/or asset sales to clean up the structure. We have downgraded it to HOLD (BUY) and cut our target price to NOK205 (260).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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