Transocean (Sell, TP: USD0.50) - Doing its best
Despite executing well on elements in its control, we believe†the equity in Transocean is long-term likely to be negatively affected by the ongoing industry-wide restructuring. Many competitors look likely to emerge with no or limited debt and industry break-even levels are set to be reduced to well below what Transocean’s capital structure requires. Although still benefiting from legacy backlog, it has c10x leverage for 2021e. With debt trading at a meaningful discount to par, we consider the equity to be at risk in a potential future debt restructuring, making us reiterate our SELL and USD0.5 target price.
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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