FKRAFT - The next large acquisition could be the trigger
SB1M er ute med en oppdatering på FKRAFT i dag. De opprettholder kjøpsanbefalingen med kursmål 40,- og skriver blant annet følgende:
"The next large acquisition could be the trigger
Conclusion
We keep our NOK40 target price, but highlight significant further upside if the company succeed in its plan of doing substantial acquisitions during 2019e. The TEM acquisition in March this year was a sizeable one, done at an EV/EBIT of 5.6x post expected synergies of NOK15m which equals ~30% of TEM’s cost base. Fjordkraft has delivered strong results after the listing at OSE in Q1 this year, and consequently lifted its EBIT margin guidance for FY2018e on Q3; we believe that another sizeable and value accretive M&A transaction is what the stock needs to spread attention and comfort in the stock market and thereby trig a deserved re-pricing. In connection with the Q3 results last week, the company said that a potential investment range for 2019e is NOK500m to NOK 1,000m: NOK1bn done at similar EV/EBIT multiples as the TEM deal should justify around NOK6 in value creation per share. The stock currently trades at 6.8% dividend yield on 2018e DPS (80% of adj. EPS).
Our analysis
· Adjusted Q3 in line, lifted margin guidance. Fjordkraft reported an adjusted EBIT of NOK58.3m, 0.7% below our forecast, and lifted its guidance for FY2018e adjusted EBIT margin within the Consumer segment due to strong performance so far this year.
· Targets significant M&A transactions during 2019e. Fjordkraft’s strategy is to take benefit of its strong market position, scale advantages and high return on capital and consolidate the current fragment market through accretive acquisitions. More than 100 electricity retailers, of which the big majority are local / regional players with limited capacity to compete against nationwide players. Increasing churn, infrastructure requirements, product development and new regulations drive costs, and the rational response for many is to sell the business to someone who gets more out of it. We see significant value potential: NOK1bn done at similar EV/EBIT multiples as the TEM deal justifies around NOK6/sh in value creation.
Analysts
Øyvind Mossige"
"The next large acquisition could be the trigger
Conclusion
We keep our NOK40 target price, but highlight significant further upside if the company succeed in its plan of doing substantial acquisitions during 2019e. The TEM acquisition in March this year was a sizeable one, done at an EV/EBIT of 5.6x post expected synergies of NOK15m which equals ~30% of TEM’s cost base. Fjordkraft has delivered strong results after the listing at OSE in Q1 this year, and consequently lifted its EBIT margin guidance for FY2018e on Q3; we believe that another sizeable and value accretive M&A transaction is what the stock needs to spread attention and comfort in the stock market and thereby trig a deserved re-pricing. In connection with the Q3 results last week, the company said that a potential investment range for 2019e is NOK500m to NOK 1,000m: NOK1bn done at similar EV/EBIT multiples as the TEM deal should justify around NOK6 in value creation per share. The stock currently trades at 6.8% dividend yield on 2018e DPS (80% of adj. EPS).
Our analysis
· Adjusted Q3 in line, lifted margin guidance. Fjordkraft reported an adjusted EBIT of NOK58.3m, 0.7% below our forecast, and lifted its guidance for FY2018e adjusted EBIT margin within the Consumer segment due to strong performance so far this year.
· Targets significant M&A transactions during 2019e. Fjordkraft’s strategy is to take benefit of its strong market position, scale advantages and high return on capital and consolidate the current fragment market through accretive acquisitions. More than 100 electricity retailers, of which the big majority are local / regional players with limited capacity to compete against nationwide players. Increasing churn, infrastructure requirements, product development and new regulations drive costs, and the rational response for many is to sell the business to someone who gets more out of it. We see significant value potential: NOK1bn done at similar EV/EBIT multiples as the TEM deal justifies around NOK6/sh in value creation.
Analysts
Øyvind Mossige"
Sa2ri
12.12.2018 kl 08:47
1757
SB1M er ute med en oppdatering FKRAFT hvor de blant annet sier følgende:
"Buy ahead of the next large Investment
Recommendation:
Buy
Target price 40.00
Share price 33.10
Conclusion
We repeat our Buy recommendation and highlight significant value potential from accretive acquisitions over the next six months. The TEM acquisition in March this yearwas a sizeable one, done at an EV/EBIT of 5.6x post expected synergies of NOK15m which equals ~30% of TEM's cost base. Fjordkraft has delivered strong results after the listing at OSE in Q1 this year, and consequently lifted its EBIT margin guidance for FY2018eon Q3; we believe that another sizeable and value accretive M&A transaction is what the stock needs to gain attention and comfort in the stock market and thereby trig a deserved re-pricing. The company has said that a likely investment range for 2019e is NOK500mto NOK 1,000m: NOK750m done at similar EV/EBIT multiples as the TEM deal should justify around NOK3.7 in value creation per share based on the current 2019e EV/EBIT multiple for FKRFAT. The implied 2019e EV/EBIT on our target price justifies NOK5.9 per sharein value creation. A NOK750m investment could increase the adjusted EPS by NOK~0.7 based on TEM multiples.
Our analysis
- Large investments expected over the next 12 months. The company has targeted acquisitions worth NOK500-1,000m during 2019e. The big number reflects a fragmented marked in which scale is key for profitability – and in which M&A should be accretive for both the seller and the buyer.
- Enough debt capacity. NOK1,000m in increased debt would imply a NIBD/EBITDA just below 1.5x for 2019e. In addition, Fjordkraft can offer shares as payment, which was part of the originalrationale for the stock listing.
- Significant value potential. NOK750m at TEM EV/EBIT multiples justifies around NOK3.7 per share in value creation based on the current 2019e EV/EBIT multiple for FKRFAT. The implied 2019eEV/EBIT on our target price justifies NOK5.9 per share in value creation. A NOK750m investment could increase the adjusted EPS by NOK0.7 based on TEM multiples.
Analysts
Øyvind Mossige "
og denne her fra sjefen sjøl:
"Fjordkraft - a brief look at the numbers
Fjordkraft looks set to deliver 2018 results that are 10% better than IPO guidance
Very cheap on adjusted multiples. P/E 11.0, EV/EBIT 8.9 on 2019E @ 5% EPS growth. Dividend yield 7.2%
- Why we adjust for amortization and one-offs
M&A in line with 2019 guidance lifts adjusted EPS by 20%
- Assuming debt financing, starting at a debt free balance sheet
- Further equity financed M&A accretive only at EV/EBIT <7 or share price >33
Analysts
Peter Hermanrud"
"Buy ahead of the next large Investment
Recommendation:
Buy
Target price 40.00
Share price 33.10
Conclusion
We repeat our Buy recommendation and highlight significant value potential from accretive acquisitions over the next six months. The TEM acquisition in March this yearwas a sizeable one, done at an EV/EBIT of 5.6x post expected synergies of NOK15m which equals ~30% of TEM's cost base. Fjordkraft has delivered strong results after the listing at OSE in Q1 this year, and consequently lifted its EBIT margin guidance for FY2018eon Q3; we believe that another sizeable and value accretive M&A transaction is what the stock needs to gain attention and comfort in the stock market and thereby trig a deserved re-pricing. The company has said that a likely investment range for 2019e is NOK500mto NOK 1,000m: NOK750m done at similar EV/EBIT multiples as the TEM deal should justify around NOK3.7 in value creation per share based on the current 2019e EV/EBIT multiple for FKRFAT. The implied 2019e EV/EBIT on our target price justifies NOK5.9 per sharein value creation. A NOK750m investment could increase the adjusted EPS by NOK~0.7 based on TEM multiples.
Our analysis
- Large investments expected over the next 12 months. The company has targeted acquisitions worth NOK500-1,000m during 2019e. The big number reflects a fragmented marked in which scale is key for profitability – and in which M&A should be accretive for both the seller and the buyer.
- Enough debt capacity. NOK1,000m in increased debt would imply a NIBD/EBITDA just below 1.5x for 2019e. In addition, Fjordkraft can offer shares as payment, which was part of the originalrationale for the stock listing.
- Significant value potential. NOK750m at TEM EV/EBIT multiples justifies around NOK3.7 per share in value creation based on the current 2019e EV/EBIT multiple for FKRFAT. The implied 2019eEV/EBIT on our target price justifies NOK5.9 per share in value creation. A NOK750m investment could increase the adjusted EPS by NOK0.7 based on TEM multiples.
Analysts
Øyvind Mossige "
og denne her fra sjefen sjøl:
"Fjordkraft - a brief look at the numbers
Fjordkraft looks set to deliver 2018 results that are 10% better than IPO guidance
Very cheap on adjusted multiples. P/E 11.0, EV/EBIT 8.9 on 2019E @ 5% EPS growth. Dividend yield 7.2%
- Why we adjust for amortization and one-offs
M&A in line with 2019 guidance lifts adjusted EPS by 20%
- Assuming debt financing, starting at a debt free balance sheet
- Further equity financed M&A accretive only at EV/EBIT <7 or share price >33
Analysts
Peter Hermanrud"
P.Eksperten
12.12.2018 kl 22:37
1702
At en analytiker i Sparebank 1 markets fremhever det positive potensialet i Fjordkraft er vel og bra. Det prøver også Undertegnede på linken "Fjordkraft - IPO". Når derimot samme analytiker mener ett større oppkjøp utført av FKRAFT bør betales med aksjer så virker analysen mot sin hensikt. Eiendelene i eldistributøren Fjordkraft består av Kundemassen som også er flyktig. At eksiterende aksjonærer er villig til å la seg utvanne i en eventuell rettet emisjon mot ett oppkjøpsobjekt og få igjen en usikker kundeporteføje virker som ett hån. Fjordkraft får heller kjøpe opp selskaper med kontanter, kontantstrøm og/eller gjeld. Det vil være nok av Spillmoment i en ekstra kundeportefølje hvor fortjenesten vil avgjøres av strømpriser og ytterligere organisk i vekst i den regionen som det oppkjøpte objektet eksisterer/opererer. Selv har jeg også høyere kursmål enn 40 kroner (om det ikke blir en rettet emisjon da).
Sa2ri
04.01.2019 kl 10:25
1427
Hermanrud er ute med en markedsoppdatering i dag hvor han blant annet trekker frem FKRAFT. Han skriver følgende:
"Fjordkraft –sikkert og godt
Kurs 33.8
•Hard konkurranse –men ikke verre enn at de største aktørene er superlønnsomme
»Mens prisene er så lave at mindre aktører går i null
•Ekstremt lavt priset –sammenligner markedet med Fjordkraft med retailers?
»Ikke rammet av netthandel og overetablering.
»Bør sammenlignes med Telecom One, ikke med norske detaljhandelsaksjer
»Direkteavkastning 7.2%. P/E 11.0, EV/EBIT 8.9
•Vi venter oppkjøp I 2019. Tipper det øker EPS med ytterligere 20%+
»Direkteavkastning 8.5%. Eller mer sannsynlig: aksjen stiger med 20%.
•Konservativ guidancei 2018 –skjer det samme i 2019?
»Selskapet leverer 10% bedre resultat I 2018 enn indikert på IPO"
"Fjordkraft –sikkert og godt
Kurs 33.8
•Hard konkurranse –men ikke verre enn at de største aktørene er superlønnsomme
»Mens prisene er så lave at mindre aktører går i null
•Ekstremt lavt priset –sammenligner markedet med Fjordkraft med retailers?
»Ikke rammet av netthandel og overetablering.
»Bør sammenlignes med Telecom One, ikke med norske detaljhandelsaksjer
»Direkteavkastning 7.2%. P/E 11.0, EV/EBIT 8.9
•Vi venter oppkjøp I 2019. Tipper det øker EPS med ytterligere 20%+
»Direkteavkastning 8.5%. Eller mer sannsynlig: aksjen stiger med 20%.
•Konservativ guidancei 2018 –skjer det samme i 2019?
»Selskapet leverer 10% bedre resultat I 2018 enn indikert på IPO"