SB1M er ute med en oppdatering på PGS etter 4Q18-fremleggelsen og CMD forrige uke. De skriver blant annet følgende:

"PGS (Buy, TP NOK 30 (24)): Strong 2019 outlook and attractive valuation

Conclusion
PGS presented a solid outlook for 2019 at its CMD, stating that 54% of the 2019 contract capacity has been booked up at 35% higher day rates than the average for 2018.The improved pricing is driven by a surge in demand for 4D seismic, where PGS is the market leader. We raise estimated day growth for PGS in 2019 from 15% to 25. The company said it will prioritize profitability over growth going forward, as well as usingcash flow to repay debt. We support this strategy and also believe it was well-received by the market. We estimate cash flow of USD 200m in 2019, including scheduled debt and lease repayments, which should make the company well positioned to refinance itsdebt maturities in 2020/21. Our base case is that the company will not issue equity as part of the refinancing, in line with the company's own stated goal. We have increased our NAV in PGS from NOK 27/share to NOK 34/share on the back of higher estimated fleetvalue, as we find valuation support in the agreed sale of Ramform Sterling. The stock also trades at ~5x P/E and ~6x EV/EBIT on our 2020 estimates, which is low. We maintain buy on PGS and upgrade our target price from NOK 24 to NOK 30, still factoring in10% discount to NAV.

Our analysis
• Comeback for contract seismic in 2019, driven by 4D – 54% of capacity booked at 35% higher day rates: At PGS' capital markets day, the company stated it has booked up 54% of its contract capacity for 2019 at 35% higher day rates than the average for 2018. This implies EBITpositive margin according to the company. The main driver for the increased pricing is high share of 4D work (90% of the booked capacity) as well as an underlying improving market. Most of the booked contracts is implies EBIT have execution in H1'19, meaningPGS has available capacity for an expected strong Q3 as well. We increase estimated day rate growth for 2019 from 15% to 25%. The demand for 4D seismic has surged over the past couple of years, and is expected to reach a new high in 2019. 27 streamer 4D surveysare out on tender or planned for 2019, the most ever. PGS is the market leader in this segment and benefits from having its multi-sensor GeoStreamer technology on all its vessels. Oil companies also generally prefer the use of the same technology as in thebaseline survey (the first survey) throughout 4D campaigns, which puts PGS in a pole position to be awarded repeat business.

• Will prioritize profitability over growth, as well as reducing the debt load – Plans to refinance in 2019: Management was clear on its intention to prioritize profitability over growth, which we believe was well-received by the market. PGS has historically struggled to generatea decent return on capital over the cycle, while the company going forward targets to deliver ROCE above its cost of capital over the cycle. Although it remains to be seen if the company will accomplish this, we like the focus on cash flow generation, costcontrol and deleveraging. The company also delivered on its ambitious cash cost guidance for 2018. Cash flow will be used to repay debt going forward, and the company targets a long-term net debt level of USD 500-600m (ex capitalized leases), which is halfthe current level. We estimate a positive cash flow of USD 200m in 2019, including scheduled debt and lease repayments, driven by an improving market and USD 75m sales proceeds from the sale of Ramform Sterling. We believe the estimated healthy cash flow generationmakes the company well positioned to refinance its 2020/21 debt maturities in 2019 without the need for new equity, which is also management's stated goal. We also note that the 2020 bonds have traded up from ~90 to ~96 since early January, following the positiveQ4 update and strong outlook comments on the CMD.

• Q4 figures above previous guidance – Underlying guidance for 2019 as expected: Q4 segment revenues and EBITDA of USD 245m/USD 155m was USD 10m above the positive pw provided on January 7th, driven by higher than expected MC revenues (USD 164m late salesvs USD 160m guided and USD 41m prefunding revenues vs USD 35m guided). Segment EBIT adj. of USD 47.9m was significantly above our/consensus USD 14m/9m on the back of lower than expected amortization charge. MC capex was guided at USD 250m for 2019, but adjustedfor IFRS 16 effects the guided MC capex was USD 270m (vs USD 277m reported in 2018). Cash cost was guided at USD 550m incl. a positive USD 50m technical IFRS 16 effect. Adjusting for this, the guided cash cost of USD 600m was line with 2018 and our estimate.Capex was guided at USD 85m vs our USD 100m estimate, with streamer replacement pushed out to 2021 but installation of scrubbers resulting in USD 8m of investment in both 2019 and 2020.

• Attractive valuation on SOTP and multiples – Sale of Sterling supportive for asset values: We calculate a NAV of NOK 34/share in PGS, up from NOK 27/share previously, as we factor in higher estimated value of the fleet on the back of valuation support from the saleof Ramform Sterling. Our updated estimate of owned vessels and equipment is USD 1.1bn, in line with Q4'18 book value, while Ramform Sterling was sold above book. We still assume 2x book value of the MC library (between where TGS and SPU trade at) in our NAV,and USD 300m value of the seismic equipment. Forward valuation is also attractive in our view, trading at ~5x P/E and ~6x EV/EBIT on our 2020 estimates. We maintain Buy and upgrade our target price to NOK 30 (24) on the back of increased NAV and higher estimates,still factoring in 10% NAV discount.

Analysts
Tommy Johannessen"

Nevner samtidig at PAS har tilsvarende kursmål (30,- fra en oppdatering på fredag), mens ARC har kursmål 42,- (oppdatering på fredag).