TGS (Hold, TP: NOK105.00) - Cutting back on investment
The guided YOY cut in MultiClient investment caught us by surprise; and while we understand the need to optimise near-term returns and cash flow, we struggle to see how lowering investment could support sales growth longer-term. We note that over the past 10 years, TGS has cut investments only in 2016 (oil price crash) and 2020–2021 (covid). We still value TGS on a pro-forma combined basis with PGS ahead of the merger scheduled to close in Q2. We reiterate our HOLD and NOK105 target price.TGS Nopec Geophysical provides geoscience data to oil and gas exploration and production companies worldwide. In addition to global geophysical and geological data libraries that include seismic data, magnetic and gravity data, digital well logs, production data and directional surveys, Co. also provides advanced processing and imaging services, interpretation products, permanent reservoir monitoring and data integration solutions.
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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