TGS Nopec (Buy, TP: NOK270.00) - Set for solid DPS increase in 2020e
TGS delivered a somewhat soft Q3 report with costs above expectations, resulting in EBITDA 5% below consensus. For Q4 our sales expectations are broadly in line with consensus, while we believe consensus is too optimistic on 2020 with expectations of 9% YOY revenue growth particularly in light of weaker E&P cash flow, flat offshore spending, and tough YOY comparables. However, our 2020e DPS at USD2 is the highest in consensus and with 2021e EV/EBIT of 7.4x, we maintain our BUY and NOK270 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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