Vow

Country:
Sector:
Market cap (m):
Norway
Capital Goods
NOK 2,279.48
Bloomberg:
Reuters:
Website:
VOW NO
VOW.OL
Share price (close):
NOK 19.95

Latest Reports

28 OCT 2021
Commissioned Research: Transitory softness in Q3
Vow published its Q3 trading update yesterday (27 October), with overall numbers falling short of street expectations. Cruise activity has started to pick up again after the COVID-19 slump in H1, but longer lead times than expected are impacting Vow's earnings. Group revenue has remained stable y/y, albeit with deflated margins and EBITDA down 25% over the same period. The soft numbers in the quarter were mainly driven by the phasing of project delivery schedules; we expect a catch-up effect going into 2022 – but highlight that visibility is low on earnings for the rest of the year. We therefore take a more cautious approach on the recovery pace and lower our estimates. We still see scope for a sequential improvement in the underlying market going forward. Following the report, we revise our fair value range to NOK 35-39 (38-41) per share based on SOTP valuation. Marketing material commissioned by Vow.

27 OCT 2021
Commissioned Research: Flash comment: Vow – Soft Q2 results
Q3 trading update released this morning (the company reports semi-annually, no quarterly consensus available). The numbers were on the soft side. On a group basis, revenue came in at NOK 97.8m, down from NOK 97.9m in Q3 2020, while EBITDA reached NOK 8.1m (8.3% margin), down from NOK 10.7m (8.3%) in Q3 2020. Restrictions relating to the COVID-19 pandemic were gradually lifted during the quarter which resulted in increased activity in the cruise industry and growth in the aftersales business. During the quarter, the company secured several milestone contracts, resulting in an all-time high current order backlog of NOK 2.1 billion (incl. options). Overall, however, the results were below our expectations, but we argue that the long-term outlook still remains attractive for the company.

31 AUG 2021
Commissioned Research: An attractive growth story ahead
The long-term equity story for Vow remains attractive, with significant growth potential within Landbased backed by increased activity within Cruise. The company offers technology that creates a circular economy for a range of industry verticals – and it has secured contracts and partnerships with key industrial pioneers such as ArcelorMittal, Repsol and Wakefield. Increased cruise activity following the reopening of societies should boost revenue and margins for its legacy business. Following the H1 2021 report, we cut our estimates for 2021-23. The negative estimate revisions are also partly due to the spin-off of Vow Green Metals. After the spin-off of Vow Green Metals, we reduce our fair value estimate range to NOK 38-41 (49-60) per share, based on our SOTP valuation model. Marketing material commissioned by Vow.

29 APR 2021
Commissioned Research: Flash comment: Q1 trading update
Vow published its Q1 2021 trading update today (it reports semi-annually). The results were soft due to an inactive cruise fleet, which continues to have a negative impact on Aftersales, in addition to negative margins within the Landbased operation as the company prepares its business to cope with future demand. Revenues came in at NOK 92.8m, down 20% y/y, and EBITDA at NOK 10.2m, down 27.1% y/y. Despite this, Cruise Projects delivered a record-high EBITDA margin of 26.3% compared to last year’s 24.3%. In addition, its order backlog was down marginally y/y, as cruise owners are looking beyond the current lockdowns caused by the pandemic and preparing for the future. We expect Cruise Projects to continue to perform well, as the order backlog secures revenues until 2024-25, and we expect a rebound in Aftersales towards the summer as cruise owners prepare to activate their fleets. We would highlight the significant potential within Landbased activities, as its partnerships with Repsol, ArcelorMittal and Elkem could result in system deliveries beyond today’s orders within cruise. Note that Vow Green Metals, to be listed within months (and which will build/run/operate the plant at Follum), has with its first production phase of 10,000 tonnes of biocarbon an order backlog potential that could contribute NOK 250m in revenues for 2021 and 2022 for Vow.

9 MAR 2021
Commissioned Research: Set for further growth
Vow's legacy business reported impressive margins for H2 2020, and it is now structuring the organisation for further growth within land-based activities. We argue that the LOI with Elkem will be accretive as it secures biocarbon offtake, and should increase the scale of production at Follum. We lift our fair value range to NOK 49-60 (35-40) per share based on our SOTP valuation. Marketing material commissioned by Vow.

8 JAN 2021
Commissioned Research: Entering the next phase
Following its announcement of a pioneer project at Follum in Norway, Vow will now take the wheel and become a producer of biocarbon. The metallurgic industry is setting ambitious targets to replace fossil coal as a reduction agent, and Vow will now supply biocarbon and help reduce emissions in the industry. Despite the current poor market for aftersales in cruise, we lift our fair value range to NOK 35-40, as we estimate Vow will reach annual biocarbon production of 100,000 tonnes by 2025. Marketing material commissioned by Vow.

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

Equity analysts

Analyst
Managing Director

Key persons

CEO: Henrik Badin

CFO: Erik Magelssen

Chairman: Narve Reiten

Numbers
Export to Excel
Nordea
NOKm
2017
2018
2019
2020
2021E
2022E
2023E
Total revenues
247.0
329.6
380.7
459.8
452.6
882.3
1,127.3
Ebitda (adj.)
26.40
39.20
45.78
46.76
51.67
134.01
208.82
Ebitda - margin
10.7%
11.9%
12.0%
10.2%
11.4%
15.2%
18.5%
EBIT (adj.)
23.2
35.7
34.9
24.9
32.5
113.9
188.3
EBIT (adj.) margin
9.4%
10.8%
9.2%
5.4%
7.2%
12.9%
16.7%
PTP (adj.)
19.2
33.5
10.1
36.3
21.9
106.0
180.4
Net profit from cont oper (adj)
11.49
29.29
14.90
13.56
16.86
82.66
140.70
Shareholders´ Equity
57.9
93.4
228.8
319.9
567.7
653.3
804.0
Net interest bearing debt
16.3
-4.0
132.6
138.3
-65.0
-39.9
-95.9
Net gearing
28.2%
-4.3%
57.7%
43.1%
-11.4%
-6.1%
-11.9%
Net debt/EBITDA
0.7
-0.1
5.0
3.6
-1.4
-0.3
-0.5
Free cash flow to equity
5.3
19.8
-102.7
-73.0
-16.1
-20.1
54.0
Diluted number of shares in issue, year-end (m)
96.2
96.4
99.9
108.9
114.3
114.3
114.3
Nordea Markets estimates published on Oct 28, 2021
Source: Company data, Nordea estimates
Per share data and multiples
Export to Excel
Nordea
NOK and %
2017
2018
2019
2020
2021E
2022E
2023E
EPS (adj.)
0.12
0.30
0.15
0.12
0.15
0.75
1.32
EPS (adj.) growth
294.0%
154.6%
-50.9%
-16.5%
18.5%
408.1%
75.9%
DPS
0.00
0.20
0.00
0.00
0.00
0.00
0.00
BVPS
0.6
1.0
2.3
2.9
5.0
5.7
7.0
P/E (adj.)
35.6
15.1
n.a.
n.a.
n.a.
26.6
15.1
EV/Sales
1.72
1.33
8.22
9.29
4.90
2.54
1.94
EV/EBITDA (adj.)
16.11
11.18
68.39
91.36
42.88
16.72
10.46
EV/EBIT (adj.)
18.33
12.26
89.76
171.70
68.23
19.67
11.60
P/BV
7.06
4.74
13.10
12.92
4.02
3.49
2.84
Dividend yield
0.0%
4.4%
0.0%
0.0%
0.0%
0.0%
0.0%
FCF Yield bef A&D, lease adj
1.3%
4.5%
-0.6%
-1.8%
-0.7%
-0.9%
2.4%
RoE
24.3%
35.2%
-9.1%
9.8%
3.1%
14.0%
20.7%
ROIC
28.8%
36.5%
13.5%
5.4%
6.0%
18.1%
25.1%
Nordea Markets estimates published on Oct 28, 2021
Source: Company data, Nordea estimates

Source: Refinitiv