Vår Energi (Buy, TP: NOK40.00) - Sustainable dividends
Despite outperforming NCS peers by ~25% YTD, Vår Energi remains our top sector pick, with the highest potential for repricing in our view, as its ~13% dividend yield could compress if it is successful in converting contingent resources to production beyond 2025. With the start-up of Balder X and Johan Castberg, FCF is set for a significant boost in 2025e, and we see FCF generation covering dividends at least to 2030e, potentially paving the way for a repricing towards peers trading at ~10–11% shareholder yield. We reiterate our BUY and NOK40 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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