Vår Energi (Buy, TP: NOK37.00) - Dividend sustainability likely in focus
We believe focus at the Capital Markets Update (CMU), set for Wednesday, will be on increasing visibility on actions Vår Energi can take to extend plateau production beyond the targeted ~400kboed for end-2025. In our view, on the sanctioned reserve base, the current dividend looks unsustainable for more than 2–3 years. In our opinion, investors share this view, since the stock is trading at a ~13% dividend yield (c2–3%-points above its peer group). Moreover, we expect the company to be aggressive explorers, where potential discoveries could add resources, future production and in turn increase long-term visibility. We reiterate our BUY and NOK37 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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