Vow

Country:
Sector:
Market cap (m):
Norway
Capital Goods
NOK 3,702.60
Bloomberg:
Reuters:
Website:
VOW NO
VOW.OL
Share price (close):
NOK 34.00

Latest Reports

27 AUG 2020
Commissioned Research: Strong order book will be supportive
Low cruise activity is putting Vow's aftersales market under pressure in the short term. Although EBITDA came in below our expectations, the company continues to display y/y growth. We also find its currently strong order book of NOK 1,146m supportive, as it secures revenues into 2024 and 2025 via newbuild projects. As we enter autumn, we expect Vow's installations within its land-based activities to become operational, and we believe that the proof of concept will result in further contracts. In line with our negative estimate revisions, we reduce our DCF-based fair value range to NOK 19-24 per share. Marketing material commissioned by Vow.

29 APR 2020
Commissioned Research: Headwinds but long-term story still compelling
We continue to favour Vow, as we believe its green narrative will generate significant growth over the long run in the cruise industry and the land-based market. As the COVID-19 pandemic has forced the cruise industry to reduce its activity, however, we anticipate some headwinds going forward. First, aftersales could come to a halt as the demand for services, spare parts and chemicals drops due to reduced ship operations. Second, we believe cruise owners are less likely to place newbuild orders at yards, as we expect their focus will be on retaining cash. We expect Vow's sales deliveries on existing newbuild orders to be less affected, as these ships will not enter operations until 2022. We reduce our fair value range to NOK 20-25 per share, from NOK 21-26 previously. Marketing material commissioned by Vow.

27 FEB 2020
Commissioned Research: Sluggish H2 but favourable long-term story
Vow reported weaker H2 2019 EBITDA than we expected, mostly due to the timing of sales recognition and lower margins for the land-based business due to its consolidation in mid-October 2019. The company, however, reported an all-time high order backlog of NOK 1,480m for the group, up 71% y/y – NOK 590m of which is options related to the cruise segment. We increase our sales estimates to reflect increasing activity within the land-based market. As we expect EBITDA margins within the land-based segment to be dilutive for the group in the short to medium term, we reduce our EBITDA estimates by 3% for 2020 and 2021. We still believe in the green narrative of Vow and acknowledge that the land-based market has the potential to become a significant growth contributor for the group. We increase our fair value range to NOK 21-26 per share.

23 OCT 2019
Commissioned Research: Story continues to develop favourably
We believe the cruise industry will continue to be a core market for Scanship, which has a strong presence already and will likely increase its market share within newbuilds. It will also benefit from global fleet growth; we expect an additional 100 newbuilds to be delivered by 2030, compared to the current order book of 92 cruise ships. Furthermore, we see a trend of increasing total clean ship system deliveries, and combined with the potential of pyrolysis incinerators, we believe that Scanship's order size per cruise ship will increase going forward. Carnival Corporation is set to be its largest opportunity within retrofits, as many of its cruise liners have poor environmental standards. We believe that the land-based markets within carbon capture and waste-to-energy represent a major opportunity, even though the timing is uncertain. We derive a DCF-based fair value range of NOK 18-23 per share for Scanship Holding. - Marketing material commissioned by Scanship Holding

29 AUG 2019
Commissioned Research: Growth within existing and new markets
We believe that Scanship will continue to prosper on its legacy, delivering waste and wastewater treatment systems to the cruise industry. The global cruise fleet consists of 92 newbuilds with delivery from end 2019. We expect that an additional 100 newbuilds will be ordered and delivered by 2030 to cope with capacity demand. As stricter regulations demand more advanced systems in order to treat wastewater, we believe that Scanship will increase its market share and lift order size per ship. Carnival Corporation, the largest cruise owner, will become its next key client, we believe. We think Carnival Corporation may retrofit parts of its fleet, as many of its cruise liners have poor environmental ratings. By acquiring ETIA, Scanship will gain access to the European land-based market as ETIA will act as its operational platform. We derive a DCF-based fair value range of NOK 18-23 per share for Scanship Holding.

10 MAY 2019
Commissioned Research: New technology will boost contract size
We revise our 2019, 2020 and 2021 EBIT estimates up by 24%, 36% and 55%, respectively. We believe the company will secure retrofit contracts in the short term; it is also tendering for 30 newbuild contracts, which will support long-term growth. Its newly developed product, MAP (microwave-assisted pyrolysis), has the potential to double the contract size for newbuilds. Scanship has low operational and financial gearing with low reinvestment requirements for existing business, setting the foundation for significant FCF growth in the coming years. We raise our fair value range to NOK 10.7-14.1 (5.0-7.0) based on base- and high-case DCF valuation. Marketing material commissioned by Scanship Holding.

1 MAR 2019
Commissioned Research: Continues to excel in a growing market
Scanship reported H2 numbers above our expectations, and continues to excel in a consolidated cruise industry delivering its sustainable waste and wastewater treatment systems. H2 2018 revenues came in at NOK 183m, 10% above our estimate. We are confident that Scanship will continue to deliver on our estimates going forward. It reported an all-time-high year-end order book of NOK 656m, up 40% y/y, with an additional NOK 200m in options, in line with our estimates. The expected growth in the cruise industry bodes well for the company, as it is tendering for an additional 22 newbuilds. With strong financials and increasing cash flow, the board will propose a semi-annual dividend of NOK 0.10, which we find positive. We calculate a higher fair value range of NOK 5.0-7.0 (NOK 4.9-7.0). Marketing material commissioned by Scanship Holding

19 FEB 2019
Commissioned Research: A green ocean strategy
Thanks to its distinctive technology for handling marine waste and wastewater, Scanship should continue to benefit strongly from the "green wave". There is an increasing sustainability mindset among ship owners, passengers, and legislators that sea pollution must be reduced and eventually eliminated. Scanship has substantial experience in this niche and a particularly strong standing among the world's largest cruise ship operators. Given steady growth in the global cruise fleet and increased environmental demands, we find that Scanship is well-positioned. Moreover, Scanship is supplementing its offering with waste-to-energy products and has even expanded their use to onshore markets, including the aquaculture industry. With innovative technology, a strong market position and capable management, we believe the outlook is promising. Marketing material commissioned by Scanship Holding

Equity analysts

Senior Analyst

Key persons

CEO: Henrik Badin

CFO: Erik Magelssen

Chairman: Narve Reiten

Numbers
Nordea
NOKm
2016
2017
2018
2019
2020E
2021E
2022E
Total revenues
171.6
247.0
329.6
380.7
496.4
701.6
954.5
Ebitda (adj.)
-2.60
26.40
39.20
45.78
49.58
74.55
121.65
Ebitda - margin
-1.5%
10.7%
11.9%
12.0%
10.0%
10.6%
12.7%
EBIT (adj.)
-5.0
23.2
35.7
34.9
30.0
55.5
102.2
EBIT (adj.) margin
-2.9%
9.4%
10.8%
9.2%
6.0%
7.9%
10.7%
PTP (adj.)
-4.3
19.2
33.5
10.1
47.4
49.0
95.7
Net profit from cont oper (adj)
-5.94
11.49
29.29
14.90
23.52
38.22
74.66
Shareholders´ Equity
45.4
57.9
93.4
228.8
239.4
275.1
347.3
Net interest bearing debt
21.6
16.3
-4.0
132.6
222.4
221.2
218.6
Net gearing
47.6%
28.2%
-4.3%
57.7%
92.5%
80.1%
62.8%
Net debt/EBITDA
n.a.
0.7
-0.1
5.0
4.5
3.0
1.8
Free cash flow to equity
-13.2
5.3
19.8
-112.0
-80.8
10.2
11.6
Diluted number of shares in issue, year-end (m)
96.5
96.2
96.4
99.9
108.9
108.9
108.9
Nordea Markets estimates published on Aug 27, 2020
Source: Company data, Nordea estimates
Per share data and multiples
Nordea
NOK and %
2016
2017
2018
2019
2020E
2021E
2022E
EPS (adj.)
-0.06
0.12
0.30
0.15
0.22
0.35
0.69
EPS (adj.) growth
-159.7%
294.0%
154.6%
-50.9%
44.8%
62.5%
95.3%
DPS
0.00
0.00
0.20
0.00
0.00
0.00
0.00
BVPS
0.5
0.6
1.0
2.3
2.2
2.5
3.2
P/E (adj.)
n.a.
35.6
15.1
n.a.
n.a.
96.9
49.6
EV/Sales
0.66
1.72
1.33
8.22
7.91
5.59
4.11
EV/EBITDA (adj.)
n.a.
16.11
11.18
68.39
79.19
52.65
32.24
EV/EBIT (adj.)
n.a.
18.33
12.26
89.76
130.94
70.74
38.38
P/BV
2.02
7.06
4.74
13.10
15.46
13.46
10.66
Dividend yield
0.0%
0.0%
4.4%
0.0%
0.0%
0.0%
0.0%
FCF Yield bef A&D, lease adj
-14.4%
1.3%
4.5%
-0.9%
-2.2%
0.3%
0.3%
RoE
-10.2%
24.3%
35.2%
-9.1%
15.7%
14.9%
24.0%
ROIC
-5.9%
23.6%
29.9%
11.0%
5.3%
8.4%
13.8%
Nordea Markets estimates published on Aug 27, 2020
Source: Company data, Nordea estimates

Source: Refinitiv