TGS (Hold, TP: NOK150.00) - Still more to prove
TGS reported its strongest Q4 late-sales since 2014, despite facing several macro challenges such as E&Ps facing significant cost inflation and the oil price dropping considerably throughout Q4 compared to the rest of the year. Nevertheless, while we have raised our EPS estimates by 10–15%, we retain our view that 2023–2024e will have relatively modest YOY late-sales growth of 5–10%. In our view, the combination of broader services cost inflation starting to take its toll on budgets and a decreasing oil price trend will lead to weaker FCF generation among E&Ps and in turn could curb seismic spending. We reiterate our HOLD but have raised our target price to NOK150 (130) on higher estimates.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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