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SOFF-NO (BUY, TP 10) Initiation

|Includes: Solstad Offshore ASA (SLOFF)

We initiate coverage of Solstad Farstad with a BUY recommendation and target price of NOK 10. We estimate a NAV/sh of NOK 12.6, but this estimate is extremely elastic to movements in fleet values due to an estimated adjusted equity ratio of a mere 10%. Thus, +/- 10% change in the fleet valuation leaves NAV +/-84% at NOK 23.1/2.1 per share.

We view the share as a good investment for the less risk averse investor, seeking exposure to an oil service behemoth at an entry-point around 40% below recent share purchases by Mr John Fredriksen (17% ownership).

SOFF NO vs peers (past 1y)

SOFF NO vs peers (past 5y)

Source: Gersemi Research, Bloomberg, company data

Disclaimer: The publisher currently owns shares in the company. 

Disclosure: I am/we are long SLOFF.