Ideas From Nordic Research Today

AKRBP sold sharply as investors sold it to make room in their portfolios for Var Energy. Var started trading today, the rotation out of AkerBP should be over. Despite higher oil prices, AkerBP is at the lowest level since September 2021, despite oil price being significantly higher. Carnegie broker comment:

Run rate EPS at USD 93/bbl gives a run rate eps around USD 4,4/ NOK 40 for 2022. We will see positive estimate revisions if brent stays above USD 75/bbl. Finalaizing the Vår transaction might be a positive trigger.

We are long AkerBP.

Pareto on Huddly

New year, new beginning
Huddly delivered Q4 figures below expectations, but announced an upbeat 2022 guidance, expecting ~50% growth y/y.

We continue to view the long-term outlooks as attractive and expect to see improvements already by Q1. Coupled with the current pricing of 9x ’22e EBITDA and 18x ’22e EBIT, we keep our Buy/TP NOK 13.5 unchanged.   Q4 figures below exp., but 2022 guidance above

Huddly reported 2021 figures below expectations but announced an upbeat 2022 guidance. The main negatives were I) 2021 revenues of NOK 337m, down 8% y/y and below guidance of 350-370m, and II) 2021 EBIT adj. of NOK 36m, down 66% y/y and 13% below our exp. In Q4, the gross margin was also unusually low at 44%, but with price hikes from Q1’22, this is expected to revert back to historical levels of +50%. Although Huddly has consistently missed guidance in 2021 (link), the company seems confident in the future with a 2022 revenue guidance of NOK 450-550m (up 50% y/y on mid), being the main positive in our view. This is supported by a backlog of NOK 107m (duration of 3-6m), up 23% q/q. Please see link for a more detailed overview.

Approaching growth again
Huddly continues to be firm that the slowdown in 2021 is due to external and temporary factors, including (i) FX headwinds, (ii) Covid-19 lockdowns hampering sales and most importantly (iii) supply chain disruptions. Similar obstacles that have hampered growth for other video technology companies, however, all states that the underlying demand is high (e.g. Poly – link). Reflecting Huddly’s encouraging comments regarding 2022, backlog, and several new product launches, we believe it will return to reporting double digit growth figures throughout 2022. For Q1 already, we estimate NOK 105m in revenues, up 23% y/y, and this might prove to be conservative given the Q4 backlog of 107m. On an annual basis we forecast revenues of NOK 494m/705m in ’22e/23e, equal to growth rates of 47%/43%, On profitability, we estimate EBIT margins of 15%/21% in 22e/23e.

Buy reiterated
While 2021 was very weak for Huddly, we still believe this reflects temporary drawbacks and anticipate a brighter future. Combined with the relative low pricing of 9x/6x ‘22e/23e EBITDA and 18x/9x ‘22e/23e EBIT, we reiterate our Buy recommendation.  TP of NOK 13.5 kept unchanged, equal to 18x ’22e EBITDA.

ABG on Frontline

BUY, FRO.OL: SP, NOK 67.08; TP, NOK 139.00 (136.00)

Not a question of ‘if’, but of ‘when’
We derive our target price of NOK 139 from a 10% premium to our one-year forward NAV of NOK 127/share, up from NOK 124. The increase is mainly due to a higher spread between high and low sulphur fuel oil, which improves scrubber profitability. Our current NAV estimate of NOK 67/share implies that Frontline trades at a P/NAV of 1.0x – higher than the peer average of 0.74x. As highlighted in our research since October of last year, we view the tanker segment as second only to the car carrier segment in terms of buy convictions in the shipping sector and we have not lost our conviction that the tanker market will turn forcefully in 2022e; in June, we model spot VLCC rates to rise towards USD 60,000/day.

Aker Horizons

The macro rotation drove investors out of growth/renewable stocks. AKH is down 50% YTD. The stock trades at 20% NAV discount.

Further the NAV is effected by sharp sell off in Aker Offshore Wind due to AOW not getting any deals in Scottish wind auctions. At the presentation yesterday, the AKH mgmt stated, that as it happen before, they expect to be partners for some of the winners to construct floating wind installations.

Further AKH main asset Mainstream is valued at costs, while Mainstream disposed recently Aela portfolio significantly above its NAV valuation – indicating the NAV valuation of Mainstream might be too conservative.

The inflation might be peaking. If that happens the interest rate expectations should come down. That will make the growth/renewable stocks attractive again. What we like in AKH is its broad focus. They are the one of the best in what they do. We do not know which business will be the winners. Some will. We are buyers of AKH at 20% discount to its depressed NAV and 50% down YTD.

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The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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