Verden rundt på 15 minutter

Transcription

1 Verden rundt på 15 minutter Quadruple M Macro, Micro & Markets by Molnes January 15th, 2016 Karl Johan Molnes Analysesjef kjm@norne.no Equities Bonds Online Trading Market Making Research Corporate Finance 1

2 Globalisering har lange perioder med sterk vekst etterfulgt av lange perioder med svak vekst Globalization expanding = Everyone dancing. Trade Growth = 2 x GDP growth : GDP 2.1% & Trade 3.8% ) : GBP 3.8% & Trade 6.2% Globalization pause = Musicians at pause. Trade Growth = GDP growth. ( ) & (2008 -? G1.25% & T1.75%) Strong growth - Main beneficiaries: MidCap companies looking to globalize to benefit brokers with local and global footprints Low interest rates - Main beneficiaries: Start-ups benefiting local brokers Share Buy Backs benefiting global brokers 2

3 Economic Growth is linked to increased access to cheap energy 3

4 China s economy will be volatile until pollution is no longer an issue - Shanghai 4

5 China s economy will be volatile until pollution is no longer an issue Hong Kong 5

6 6

7 Alberta Canada Climate Plan has room for Oil Sands

8 Mmbbl/d Global Oil Production

9 WTI Fibonacci Levels Sources: Macrobond, Norne Securities 9

10 6 faktorer som gir god avkastning Momentum Low Size Low Volatility High Yield Quality Value 10

11 Stockpicking Agenda for the Day Cheap Liquid High Yield Clean Frontier 11

12 BUY Odfjell TP NOK 40/sh. Project Felix implementation Net result targeted to increase by USD 100m/y Positive net profit 2Q in a row and expected to increase going forward Source: Odfjell 12

13 One Does Not Need to Look Far for Opportunities Chemical Tanker Rate Index 95 Dry Bulk Rate Index aug'14 nov'14 feb'15 mai'15 aug'15 nov' aug'14 nov'14 feb'15 mai'15 aug'15 nov'15 13

14 BUY Odfjell TP NOK 40/sh. Profit & Loss (USDm) E 2016E 2017E 2018E 2019E Operating revenues 1,212 1,027 1, ,018 1,047 1,076 Operating expenses -1, EBITDA Depreciation & Amortisation EBIT (adj) Non-recurring items EBIT Net interest & other financial effects Pre-tax profit Minority interests Taxes Profit after tax EPS rep. (USD) EPS adj. (USD)

15 Stockpicking Agenda for the Day Cheap Liquid High Yield Clean Frontier 15

16 The US oil exports are important as they would boost transportation demand 16

17 Number of active land rigs Saudi oil strategy in one chart = good for tanker business

18 Dividend yield BUY Frontline TP 35/sh. 20,0 % 19% 15,0 % 15% 10,0 % 5,0 % 6% 0,0 % 0% 0% 0% E 2016E 2017E 18

19 Stockpicking Agenda for the Day Cheap Liquid High Yield Clean Frontier 19

20 LPG Shipping tanker supply and demand Condensed Propane Supply: Global VLGC fleet and orderbook Demand Emerging Markets like Indonesia & India are providing incentives to switch to propane for domestic use m tonnes LPG available from Abu Dhabi and Qatar US export capacity developing on track: % Source: Dorian LPG 20

21 Fleet Utilization and Day rates: Extremely tight late 2016 expected Fleet Utilization 2015 Fleet Utilization % % % % % 70% % 70% % % % % % % % 20% % 20% % % % jan feb mar apr mai jun jul aug sep okt nov des % jan feb mar apr mai jun jul aug sep okt nov des Spot VLGC' E Spot VLGC'15

22 NOK/sh. BUY Avance Gas TP NOK 200/sh Q15 1Q16 2Q16 3Q16 4Q16 Share price Cumulative DPS 22

23 Stockpicking Agenda for the Day Cheap Liquid High Yield Clean Frontier 23

24 Scatec Solar vs REC Silicon: Solar Parks vs the Commodity Polysilicon Super-Profit goes to players at either of the ends of the value chain REC Silicon Scatec Solar, Vivint Solar Source: Bloomberg, Norne Securties Share price (rebased to 100 at ) REC Silicon (RHS) Scatec Solar REC Solar (delisted) Polysilicon Price USD/kg Source: Bloomberg, Norne Securties

25 NOKm NOK/sh. BUY Scatec Solar TP 48/sh , ,00 2,50 2, ,50 1,00 0, E 2016E 2017E 2018E Operating revenues EBITDA EPS adj. (NOK) - 25

26 Stockpicking Agenda for the Day Cheap Liquid High Yield Clean Frontier 26

27 Hydrogen is a baby, Solar is a teenager and Wind is a grown up Vestas GCL Hydrogen companies Sources: Bloomberg, Infinancials, Norne Securities 27

28 USDm DKK Wind: Vestas Wind Systems Revenues and EBIT margin % Share price % 5% % % % Inntekter EBIT margin -15%

29 Growing up ain t easy 29

30 Wal-Mart Inc is using 2000 Hydrogen Fork Lifts from Plug Power Wal-Mart Inc is using Hydrogen because: + Less downtime for fueling saves capex versus Electric + Hydrogen better for lifting than Electric = Improved operating margins 30

31 Proton Power Systems won a contract with Deutsche Bahnbau Deutsche Bahnbau will offer a service that collects hydrogen from surplus wind and solar renewable energy. Deutsche Bahnbau will replace diesel on its service trains with hydrogen. 31

32 32

33 BUY Gaming Innovation Group TP NOK 3/sh. Source: Gaming Innovation Group, Norne Securities 33

34 Buy Recommendations for 2016 Energy Shipping Buy Odfjell SE (ODF NO) Chemical Tankers Buy Frontline Ltd (FRO NO) Oil Tankers Buy Avance Gas (AVANCE NO) LPG Tankers Banking Buy DNB (DNB NO) Buy Sparebanken Vest (SVEG NO) Buy Helgeland Sparebank (HELG NO) Small Caps Buy Scatec Solar (SSO NO) Buy Gaming Innovation Group (GIG NO) Buy Photocure (PHO NO) 34

35 Valuation changes after the USD 80 oil floor in 2014 became the new ceiling in 2015 Valuation changes after the USD 80 oil floor in 2014 became the new ceiling in Detnor Statoil Forward curve Perceived USD 80 Oil Floor in 2014 Perceived USD 80 Oil Ceiling in 2015 Statoil Detnor Forward curve Share prices of large oil companies in the US & Europe have moved sideways this year Spot oil has dropped from USD 60 to USD 40 to trade around ½ the valuations of oil stocks with quality balance sheets

36 DNB (Buy, TP NOK 130/sh.) Clarified capital regulatory framework (new CET1 requirement of 15.0% by end-2016 announced last October) => more visibility and relief for DNB and share Capital efficiency initiatives (e.g. sale of non-core assets, consolidation of DNB Life) will add bps to CET1 by end-2016 => We estimate the CET1 of 15.1% by end-2016 DNB assured that latest drop in oil prices does not change its loan losses provisions guiding - NOK 3bn for 2015, and for around NOK 4.0bn. We and consensus already are in the range of NOK bn Solid dividend yield 5.4% and 7.9% for 2016 and 2017 Based on 30% dividend payout for 2015 and 40% for 2016 Attractively priced vs. Nordic peers 28% disc. to Nordic banks on 2015e-2017 P/E, and 41% disc. P/B Discount explained by lower dividend Weak share performance recently Buy, TP of NOK 130/sh. (32% upside, last NOK 98.6/sh.) Based on 5% discount to avg. DDM & RIV value Trigger for share yesterday s assurance that loan losses guiding kept intact is positive for share => low oil prices explain weak share performance lately => risk of loan losses NOKm Estimates P/E adjusted P/B Dividend Yield 2015E 2016E 2017E 2015E 2016E 2017E DNB Norne % 5.4 % 7.9 % DNB Consensus* % 4.4 % 6.6 % Nordic Peers Svenska Handelsbanken Consensus* % 5.8 % 6.0 % Nordea Consensus* % 7.1 % 7.5 % Skandinaviska Enskilda Banken Consensus* % 6.7 % 7.1 % Swedbank Consensus* % 6.6 % 6.9 % Danske Bank Consensus* % 4.8 % 5.3 % Average % 6.2 % 6.6 % Premium/(disc.) of DNB consensus est. to peers -28% -28% -28% -41% -1.6%p -1.8%p 0.0%p * Infinancials 145 NOK Jan Mar May Jul Sep Nov Jan 2015 DNB OSEBX (Rebased) Source: DNB, Macrobond, Infinancials 36

37 HELG (Buy, TP NOK 75/EC) Comfortable CET1 capital ratio: last 14.4%, we estimate 15.0% at end-2016 Above 14.5% level generally required by FSA We do not expect equity issue or other drastic messures to keep up with capital requirements Attractive pricing multiples: P/B 0.60, 2016e P/E 6.3 Good dividend yield estimated: 5.0% for 2015 and 7.1% for div. yield highest among our covered savings banks Zero exposure to oil-related sectors One of highest deposits-to-loans ratios of 64% Further interest rate reductions on mortgages will likely continue to be partly compensated through reduction of deposit rates Some banks will not have this luxury Buy, TP of NOK 75/EC (44% upside, last NOK 52.25/EC) CET1 ratio, %, 3Q Large Medium Small SIFI * Adjusted for equity issue Dividend yield, %, 2016E Large Large Medium Medium Small Small Source: HELG, Savings Banks 37

38 SVEG Strenghtened CET1 ratio through rights issue and lower dividend for 2015 => much lower risk of equity issue going forward Current CET1 ratio target 14.5% by year-end 2016 We estimate 13.6% by end-2015 and 14.5% by end-2016 Oil-related exposure is low (around 1.3% of lending) Retail market share (74%) in lending above average (reduces risk) Pricing ratios undemanding P/B 0.56 below historical avg. of e adj. P/E 6.8 Low dividend yield for 2015 to be compensated with much higher payout for % for 2015 (based on 25% payout) and 7.0% for 2016 (50% payout) Guiding 50 80% dividend payout once CET1 requirement met TP before rights issue NOK 61/EC Fair value adj. for rights issue NOK 43/EC based on 40% for DDM and 60% for RIV, without discount Last price NOK 33.00/EC 0.88 P/E adj. ratio, 2016E Large Medium Small P/B ratio, 3Q Large Medium Small Source: SVEG, Savings Banks 38

39 Disclosures and disclaimer STANDARDS AND SUPERVISORY AUTHORITY This report has been prepared by Norne Securities AS, which is supervised by The Financial Supervisory Authority of Norway (Finanstilsynet). Industry standards issued by The Norwegian Securities Dealers Association (Verdipapirforetakenes Forbund) ( have been used in preparing this report. DISCLAIMER This report is provided for information purposes only. It should not be used or considered as an offer to sell or a solicitation of an offer to buy any securities. This report is prepared for general circulation and general information only. It does not take into account the specific investment objectives, investment knowledge and experience and financial situation of any recipient. Investors seeking to buy or sell any securities discussed or recommended in this report, should seek independent financial advice relating thereto and make his/her own appraisal of the tax or other financial merits of the investment. Any opinions expressed are subject to change without prior notice. This report is based on information from various sources believed to be reliable. Although all reasonable care has been taken to ensure that the information herein is not misleading, Norne Securities AS makes no guarantee, representation or warranty, expressed or implied as to its accuracy, adequacy or completeness. Neither Norne Securities AS, its employees, nor any other person connected with it, accepts any liability whatsoever for any direct, indirect or incidental, special or consequential loss of any kind arising out ofthe use or reliance on the information in this report. This report is intended for use only by those persons to whom it is made available by Norne Securities AS. This report may not be distributed, quoted from or reproduced, in full or in part, in any manner without written approval by Norne Securities AS. RECOMMENDATION STRUCTURE Norne Securities general recommendations Buy, Hold and Sell are based on the expected absolute return on the financial instrument within the next 12 months, which equals to an upside to the target price, in combination with a risk profile. The target price represents the price level which the analyst expects the financial instrument to trade at within the coming 12 months. The table below shows the ranges of returns under different risk levels, based on which the recommendation is being determined: Total return next 12 months (upside to target price) Risk Buy Hold Sell Low > 10% 2% - 10% < 2% Medium > 15% 3% - 15% < 3% High > 25% 5% - 25% < 5% In addition to the general recommendations, Trading Buy and Trading Sell recommendations can be used in the case where the analyst predicts a short term share price performance different from the twelve-month general recommendation. Trading Buy is given when the share price is expected to rise and Trading Sell is given when the share price is expected to fall in the short term (several days to several weeks horizon). Our risk assessments range from high risk to medium risk and low risk and are based on a subjective assessment of the following factors: 1) volatility in the share price, 2) liquidity in the share, 3) strength of the balance sheet, 4) absolute earnings level and trend and 5) estimate risk. TARGET PRICE AND UPDATES Target prices may be based on one or several valuation methods, for instance, the discounted cash flow (DCF) analysis or applying fair pricing multiple(s) based on historical valuation or peer pricing level. Target price may not necessarily equal to the fair value of the financial instrument certain discount or premium is possible due to various reasons, depending on the analyst s view of what the price may be within the 12 months period. Norne Securities AS plans to update the recommendation based on the following events: the target price is achieved; new accounting figures are released; any significant news on the company or its industry is announced. DISCLOSURE OF INTERESTS Norne Securities AS may at any time perform investment banking or other services or solicit investment banking or other mandates from the company or companies covered in this report. Norne Securities AS may hold positions in securities covered in this report due to its own-account trading that is part of its investment services operations, such as market making. Norne Securities AS has appointed and may at any time appoint tied agents to provide investment services on behalf of Norne Securities AS. Tied agents are listed in the public registry of the Norwegian Financial Supervisory Authority, and an updated overview of appointed tied agents of Norne Securities AS can be found on PREVENTING CONFLICTS OF INTEREST Norne Securities AS has arrangements in place with the aim of preventing conflicts of interest. As part of these arrangements, Norne Securities AS has established information barriers between different parts of the company to restrict and control the exchange of sensitive information. No direct link exists between remuneration of the Norne Securities AS analysts and investment banking services provided by Norne Securities AS. Under our internal regulations, which have been prepared in accordance with applicable legislation and relevant industry standards, our analysts are not permitted to purchase new securities in the companies they cover. POTENTIAL CONFLICTS OF INTEREST Norne Securities AS has provided corporate services over the previous 12 months for the following issuers of financial instruments where Norne Securities AS has research coverage: 1. Publicly disclosed not immaterial investment banking services or issues of financial instruments where Norne Securities AS has been lead manager or co-lead manager: Borgestad, Fjord Line, Gaming Innovation Group, Hugo Games, Indre Sogn Sparebank, Induct, Jæren Sparebank, Melhus Sparebank, NattoPharma, Sparebanken Vest. 2. Market making: AKVA Group, Aqua Bio Technology, Aurskog Sparebank, Borgestad, ContextVision, Helgeland Sparebank, Hofseth Biocare, Hugo Games, Indre Sogn Sparebank, Jæren Sparebank, Melhus Sparebank, NextGenTel Holding, Photocure, Scana Industrier, Serendex Pharmaceuticals, Skue Sparebank, Sparebanken Sør, Sparebanken Vest, Storm Real Estate, Tide, Totens Sparebank, Voss Veksel- og Landmandsbank. Please note that the following savings banks, for which Norne Securities AS has research coverage, are among the shareholders of Norne Securities AS: Sparebanken Vest (47.58% share), Sparebanken Sør (17.08%), Helgeland Sparebank (7.47%) and Sparebanken Øst (2.48%). The total list of the owners of Norne Securities AS can be found on: A list of share holdings of the Norne Securities employees can be found on Distribution of Norne Securities recommendations during three months up till December 31, 2015: Buy Hold Sell Total recommendations % of total 45% 40% 15% Corporate clients* % of corporate clients* 56% 39% 5% * Includes publicly disclosed not immaterial investment banking services or issues of financial instruments where Norne Securities AS has been lead manager or co-lead manager, and market making clients during the 12 months prior to the overview date. Note: In the table above, Trading Buy recommendation is treated as Buy, and Trading Sell is treated as Sell. CAUTIONARY NOTE REGARDING RISK An investment in the company involves risk, and several factors could cause the actual results, performance or achievements of the company to be materially different from future results, performance or achievements that may be expressed or implied by statements and information in this presentation. Including, among others, risk or uncertainties associated with the company s business segments, development, growth management, financing, market acceptance and relations with customer, and more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environment, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this document. Past performance is not a guide to future performance. Investing in securities may result in a loss of all or part of the investment. DISTRIBUTION RESTRICTIONS This report is not intended for and must not be distributed to private customers in the UK or US. Norne Securities AS and its employees are not subject to the Rules of the Financial Industry Regulatory Authority (FINRA) governing research analyst conflicts. The research reports are intended for distribution in the United States solely to major U.S. institutional investors as defined in Rule 15a-6 under the United States Securities Exchange Act of 1934, as amended and may not be furnished to any other person in the United States. Each major U.S. institutional investor that receives a copy of a Norne Securities AS research report by its acceptance thereof represents and agrees that it shall not distribute or provide copies to any other person. Reports are prepared by Norne Securities AS and distributed to major U.S. institutional investors under Rule 15a-6(a)(2). COPYRIGHT This report may not be duplicated, photocopied or otherwise reproduced, in full or in part, under applicable copyright laws. THIS REPORT IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS REPORT IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS. 39

40 Norne Securities AS Norne Securities AS Oslo Norne Securities AS Vilnius Jonsvollsgaten 2 Haakon VIIs gt. 9 Kęstučio g. 47 Postboks Oslo Vilnius 5020 Bergen Lithuania kundeservice@norne.no