Vår Energi (Buy, TP: NOK34.00) - Attractive yield covered by FCF
Q2 EBITDA fell shy of our estimate as production costs were above our expectation due to high maintenance activity during the quarter. On a positive note, key development projects remain on track for first oil in 2024, and the dividend policy implies a cUSD1.1bn dividend for 2023, in line with our estimate. The ~15% average dividend yield for 2023–2025e is covered by FCF generation (c17% FCF yield). We have made limited estimate changes beyond factoring in the Q2 results. We reiterate our BUY and NOK34 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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