Fondsfinans Weekly Picks

(1)

Fondsfinans Weekly Picks

21 February 2012

(2)

Portfolio last week

Fondsfinans' Weekly Picks

13.02 - 20.02.2012

Outperform portfolio

Price

Ticker

Date rec.

At rec. Week start

Last

Current

Accum .

CEQ

02.01.2012

72.5

83.8

82.8 -1.3 %

14.1 %

EDBASA

05.12.2011

9.3

13.0

13.2 1.5 %

42.7 %

MHG

09.01.2012

3.0

3.1

3.17 2.1 %

6.8 %

PRS

12.12.2011

40.0

49.3

50.0 1.5 %

25.0 %

SFR

13.02.2012

37.5

36.8 -1.9 %

-1.9 %

SIOFF

06.02.2012

9.7

9.4

9.9 5.6 %

2.9 %

RETURN

1.3 %

17.6 %

RETURN OSEBX

385.0

415.8

426.0 2.5 %

10.7 %

RETURN DIFFERENCE

-1.2 %

6.9 %

Underperform portfolio

Price

Ticker

Date rec.

At rec. Week start

Last

Current

Accum .

GOGL

30.01.2012

4.8

5.5

5.6 -0.7 %

-16.3 %

NHY

30.01.2012

30.8

31.5

33.9 -7.7 %

-10.2 %

TEL

16.01.2012

97.4

98.0

102.0 -4.1 %

-4.7 %

RETURN

-4.2 %

2.1 %

Sw itch (long/short)

Price

Ticker

Date rec.

At rec. Week start

Last

Current

Accum .

(3)

This week’s portfolio

OUTPERFORM:

EDBASA, GSF, MHG, SFR, SIOFF, STL

–

In: GSF,

STL

–

Out:

CEQ, PRS

UNDERPERFORM:

GOGL, NHY, TEL

–

In:

–

Out:

(4)

Outperform portfolio

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

30 Dec '11

1

3

5

7 Week

(5)

Weekly picks historical performance

(Only outperform portfolio)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

(6)

6

Outperform portfolio

(7)

2015 Financial target NOK 1.3b EBITA vs NOK 950m expected

Details reveal that much of improvement in 2013

–

Will increase 2013 EBITA by NOK 100m or 10%

Working capital reduction programme – from 6,5% of sales to 4,0%

–

Targets release of NOK 300m of cash in addition to ordinary cash flow

Says comfortable gearing ratio <2.0x and will reach this in 2012

–

I.e can move dividend higher in target ratio of 20-50%

–

Dividend could amost double 2012 to 0.65 – again in 2013 to 1.1

Pricing in line with ATEA on 2012 = 19, on 2013 = 23

EDB ErgoGroup

NOK 13.2

Buy

(8)

With new targets

DISCOUNTED CASH FLOW

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NOK million 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E Term

Sales 12 447 12 841 13 225 13 622 14 030 14 451 14 885 15 331 15 791 16 265 16 590 Growth -1,3 % 3,2 % 3,0 % 3,0 % 3,0 % 3,0 % 3,0 % 3,0 % 3,0 % 3,0 % 2,0 % EBITDA 1 158 1 249 1 344 1 635 1 754 1 864 1 920 1 978 2 037 2 098 2 140 EBITDA margin 9,3 % 9,7 % 10,2 % 12,0 % 12,5 % 12,9 % 12,9 % 12,9 % 12,9 % 12,9 % 12,9 % Depreciation & Amortization -655 -541 -530 -530 -545 -561 -578 -595 -613 -632 -651 EBIT 503 708 814 1 105 1 209 1 303 1 342 1 382 1 424 1 467 1 490 Calculatory tax 141 198 228 309 339 365 376 387 399 411 417 Cashflow from operations 1 017 1 051 1 116 1 325 1 415 1 499 1 544 1 591 1 638 1 688 1 723 Net investments working capital 103 344 128 16 16 17 17 18 18 19 13 Net investments assets 394 439 471 545 561 578 595 613 632 651 664 Net cash flow 520 268 516 765 838 904 932 960 988 1 018 1 046

Years 0,9 1,9 2,9 3,9 4,9 5,9 6,9 7,9 7,9

Discounted value 478 648 651 643 607 572 540 509 523

Net present value CF 12-13 1 126

_ASSUMPTIONS

Net present value CF 14-19 3 522 Beta 1,2

NPV terminal value 7 268 Risk premium after tax 5,0%

Estimated EV 11 916 Risk free rate 4,0%

Net interest bearing debt 31.12.11 3 025 Return equity 10,0 %

Value equity 8 891 Return debt 6,0 %

No. of shares 266,2 Debt ratio 20,0 %

NPV per share 31.12.11 33 WACC 9,2 %

Working capital/Sales 4,0 % Capex/Sales 4,0 %

(9)

EDB is undervalued at current forecasts

Key figures (NOKm )

2010

2011

2012E

2013E

3q11

4q11

Revenues

12 447

12 841

13 225

13 868

2 928

3 478

EBITDA

1 158

1 249

1 344

1 556

331

364 EBITA

587

778

886 1 098

217

242 Pre-tax

-102

356

525

848

94

105 Net Income

-91

230

367

597

58

73 EPS, recurring

2,00

1,71

1,97

2,41

0,54

0,57

Revenue grow th

-1 %

3 %

5 %

4 %

3 %

EBITDA margin

9,3 %

9,7 %

10,2 %

11,2 %

11,3 %

10,5 %

EV/Sales, static

0,6

0,4

0,5

0,4

EV/EBITDA, static

5,6

5,2

4,8

4,1

EV/EBITA, static

11,0

8,3

7,3

5,9

EV/Op.FCF, static

18,1

7,9

8,2

6,1

P/E, adj

7,9

5,7

6,5

5,3

P/B

0,8

0,5

0,6

(10)

Grieg Seafood ASA

NOK 5.7

BUY

(GSF)

21 February 2012

Target NOK 12

GSF trades around EV/kg of 24, P/E (13)

around 3.5 and P/B ~0.3

Salmon prices in March towards Easter

should be attractive and estimated around

NOK 28/kg level

Attractive GSF Finnmark Easter biomass

this year

NAFS Seafood conference in Oslo 6.-8.

March

Volume guidance Licenses 2010 2011 2012 2012 Y/Y Y/Y

at 3Q at 4Q 11/10 12/11 Farming Finnmark 24 20 705 16 143 20 000 20 000 -22% 24% Farming Rogaland 20 12 839 15 986 17 000 17 000 25% 6% Farming Canada 25 13 682 13 236 13 000 14 000 -3% 6% Farming Shetland 48 16 988 14 717 19 000 20 000 -13% 36% Total GSF 117 64 214 60 082 69 000 71 000 -6% 18%

Key figures (NOK m) 2008 2009 2010 2011 2012E 2013E 4Q10 4Q11

Total revenues 1 488 1 622 2 456 2 067 1 997 1 936 670 520

EBITDA 143 275 687 344 384 478 207 0

EBIT bef. adj. -167 154 568 203 235 329 174 -38

IFRS biomass adj. -34 115 208 -395 0 0 90 71

PTP -299 203 760 -195 152 257 329 43 EPS -2.65 1.04 4.78 -1.10 0.98 1.66 2.23 0.38 EPS adj 1.13 1.12 2.87 1.39 0.98 1.66 1.00 -0.21 DPS 0.00 0.25 1.35 0.00 0.20 0.33 NIBD 1 463 1 339 1 015 1 447 1 328 1 032 1 015 1 447 Farming Finnmark 16 903 14 218 20 705 16 143 19 800 17 160 7 602 5 728 Farming Rogaland 6 733 12 000 12 839 15 986 16 800 15 960 3 610 4 082 Farming Canada 16 326 10 134 13 682 13 236 14 100 12 690 2 371 3 970 Farming Shetland 13 838 13 818 16 988 14 717 19 600 16 660 4 253 4 478 Total farming (tons) 53 800 50 170 64 214 60 082 70 300 62 470 17 836 18 258

Total farming growth Y/Y -7% 28% -6% 17% -11% 12% 2%

EBIT/kg -2.9 3.3 9.3 3.4 3.4 5.4 10.1 -2.0 EV/Sales 0.6 1.0 1.0 0.9 EV/EBITDA 2.2 6.1 5.1 3.5 EV/EBIT 2.7 10.2 8.4 5.1 P/E adj. 1.6 4.1 5.8 3.4 P/B 0.3 0.4 0.3 0.3

(11)

GSF financials – ongoing refinancing

2012 waived (highly geared company; net debt around NOK 19/kg fish)

New funding of NOK 400m being established. Final approval pending on

one of the syndicate banks

4 banks - Sp Vest (lead), Nordea, Sp 1 SMN & BnBank

Paying down Grieg Holding AS with NOK 200m

The management is confident that closing will take place

Grieg Seafood ASA 1Q11 2Q11 3Q11 4Q11 1Q12E 2Q12E 3Q12E 4Q12E 1Q13E 2Q13E

EBITDA 4Q rolling 710 683 550 344 239 147 249 384 426 445 Equity 2 180 1 742 1 631 1 690 1 714 1 759 1 827 1 925 1 990 2 032 NIBD 982 1 142 1 226 1 447 1 456 1 382 1 349 1 328 1 295 1 185 Gross bank debt 1 156 1 255 1 401 1 600 1 600 1 600 1 600 1 400 1 400 1 400 Cash end period 174 114 174 153 143 218 251 72 105 214 Adj. NIBD/4Q roll. EBITDA <5.0 1.4 1.6 2.2 4.2 6.0 9.3 5.3 3.4 3.0 2.6 NIBD/NWC <1.5 0.6 0.9 1.1 1.1 1.0 1.0 1.0 0.9 0.9 0.9 Adj. equity ratio > 35% 52% 46% 41% 41% 42% 43% 44% 48% 50% 51% Source: Fondsfinans estimates

(12)

Marine Harvest ASA

NOK 3.172

BUY

(MHG)

21 February 2012

Target NOK 4.0

MHG trades around EV/kg of 33 and P/E

(13) around 7.0

We expect salmon price to slide back this

week

However, salmon prices in March towards

Easter should be attractive and estimated

around NOK 28/kg level

NAFS Seafood conference in Oslo 6.-8.

March

Key figures 2009 2010 2011E 2012E 2013E 4Q10 4Q11E Total revenues 14 500 15 191 16 138 14 882 16 104 4 588 4 164 EBITDA 2 188 3 874 3 558 2 379 3 102 1 229 549 EBIT (before IFRS) 964 3 198 2 700 1 718 2 440 1 065 383 Net IFRS adj. 301 1 092 -1 325 0 0 499 0 PTP 1 661 4 281 1 471 1 375 2 142 1 531 312 Reported EPS 0.363 0.878 0.306 0.290 0.449 0.313 0.065 EPS adj. 0.364 0.723 0.522 0.290 0.449 0.234 0.071 Chilean volumes 36 204 10 728 24 802 36 000 37 080 6 773 9 000 Norw egian volumes 201 676 202 456 218 124 237 000 237 450 59 973 68 000 Total volumes 327 100 295 841 341 096 359 867 359 938 90 485 102 000 Volumes Y/Y -10% 15% 6% 0% 13% DPS 0.55 1.00 0.80 0.15 0.31 NIBD 5 075 5 218 6 046 5 377 5 619 5 218 6 046 EV/ Sales 1.1 1.1 1.0 EV/ EBITDA 4.9 7.0 5.4

EV/EBIT, before adj. 6.4 9.7 6.9

P/E adj 6.0 10.8 7.0

(13)

4Q11 earnings hit by declining margins

Data for January indicate margins will improve in 1Q11

Especially Poland is important:

–

Now: Appreciating zloty and increasing pump

–

Higher margins crucial to defend capex program

Stock price came signifcantly down on 4Q figures

–

We believe overreaction

Margin improvement and lower risk -> Good point of entry!

Statoil Fuel & Retail

NOK 36.83

Buy

(14)

0.82 0.84 0.86 0.88 0.9 0.92 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s ** * Ja n 80 90 100 110 120 Ju n _Jul Au g Se p Ok t No v De s ** *J a n

Pump price (index = 100) Brent crude (index = 100)

11.9 11.9 12.0 12.5 12.2 12.112.2 11.811.9 11.911.8 12.0 12.5 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s ** *J a n 13.23 13.46 13.70 14.37 14.0014.15 14.18_{13.94 13.91 13.89 13.8213.87} 14.56 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s ** * Ja n

New fuel tax of SEK 0.19 per liter, but increase in pump

price is higher than that

SWEDEN

Pump Price* (SEK)

Pump Price and Brent Crude** (index NOK)

Source: Bloomberg

* Price included taxes for Euro-Super 95 Gasoline

Pump Price* (NOK)

(15)

80 90 100 110 120 Ju n _Jul Au g Se p Ok t No v De s Ja n

Pump price (index = 100) Brent crude (index = 100)

12.2 12.1 12.6 13.0 12.6 12.8 12.9 12.3 12.7 12.2 12.2 12.3 12.8 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n 11.45 11.67 11.96 12.45 12.12 12.16 12.40 11.90 12.04 11.84 11.6811.77 12.37 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n

Higher fuel price outweighs weaker DKK

DENMARK

Pump Price* (DKK)

Pump Price and Brent Crude** (index NOK)

Pump Price* (NOK)

DKK/NOK exchange rate

1.01 1.02 1.03 1.04 1.05 1.06 1.07 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n

(16)

Fuel price for January still not reported, but news flow

indicates the price is up more than the added NOK 0.10 tax

NORWAY

Source: Bloomberg

Pump Price* (NOK)

Pump Price and Brent Crude** (index NOK

13.3 13.4 13.9 14.2 14.3 14.3 14.2 14.1 14.0 14.0 13.8 13.8 ? Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n 90 95 100 105 110 Ju n _Jul Au g Se p Ok t No v De s Ja n

(17)

Pump Price (index = 100) Brent crude (index = 100)

9.9 9.4 9.7 10.1 10.1 10.2 10.1 9.4 9.3 9.3 9.5 9.4 10.0 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n 4.92 4.82 4.99 5.12 5.13 5.17 5.20 5.06 5.23 5.26 5.52 5.40 5.53 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n

Appreciating zloty of significant importance

POLAND

Pump Price* (PLN)

Pump Price and Brent Crude** (index NOK)

Pump Price* (NOK)

PLN/NOK exchange rate

(18)

18 80 90 100 110 120 Ju n _Jul Au g Se p Ok t No v De s Ja n

Recovering from price war

ESTONIA

Source: Bloomberg

Pump Price* (EUR)

Pump Price and Brent Crude** (index NOK)

Pump Price* (NOK)

EUR/NOK exchange rate

7.5 7.55 7.6 7.65 7.7 7.75 7.8 7.85 7.9 7.95 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n

(19)

More positive outlook

LITHUANIA

Pump Price* (LTL)

Pump Price and Brent Crude** (index NOK)

Pump Price* (NOK)

LTL/NOK exchange rate

(20)

10.6 10.7 10.8 10.9 11 11.1 11.2 11.3 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n 9.7 9.4 9.9 10.1 9.9 10.2 10.2 9.9 9.7 10.2 10.1 9.9 10.5 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n 0.86 0.86 0.90 0.92 0.91 0.93 0.93 0.92 0.87 0.93 0.91 0.89 0.96 Ja n Fe b Ma r Ap r Ma i Ju n _Jul Au g Se p Ok t No v De s Ja n

Also looks better

LATVIA

Source: Bloomberg

Pump Price* (LVL)

Pump Price and Brent Crude** (index NOK)

Pump Price* (NOK)

LVL/NOK exchange rate

85 90 95 100 105 110 Ju n _Jul Au g Se p Ok t No v De s Ja n

(21)

2012 North Sea spot AHTS market set to be very

hot!!!!

–

Siem Offshore has biggest spot exposure of the

Oslo-listed names

–

2012 to date spot earnings twice that of early 2011

–

We expect to see NOK 1m/day barrier breached in 2Q12

Long-term AHTS contract pending in Brazil

–

Award due any time

–

Statoil also has LT tender for AHTs with capabilities to

operate in Northern waters

Siem WIS due to deliver commercial contracts

–

Management has said late 2011/early 2012

–

This was reiterated at recent Fondsfinans presentation

–

We extend this timeline to Mid-February

North Sea spot exposure

Buy

Target NOK 15

Siem Offshore

(SIOFF)

NOK 9.93

21 February 2012

Spot rates large AHTS

AHTS PSV

Siem Offshore 6

Deep Sea Supply 1 1

Farstad Shipping 2 2

Solstad Offshore 3 1

Havila Shipping 3 2

DOF 1 2

Maersk 6

Viking Supply Ships 6 1

Rem Offshore 1 5

(22)

Rising drilling activity leads the way

2012 forecast:

Based on NPD’s forecast for

exploration and appraisal

wells (55 vs. 52 in 2011)

NCS mobile rig fleet going

from 28 to 36 through 2012

Assuming 6 wells per year

per rig



gives an average

delta of 24 wells in capacity

(23)

Spot AHTS represents a huge swing factor

We assume USD 67.5k as average

spot earnings for 2012

Siem operates 10 large AHTS and

owns 8 of them

–

4 are fixed long-term in Brazil

–

6 operate spot in the North Sea

Assuming USD 75k/day on 4 vessels

adds USD 0.027 or NOK 0.16/share

–

Our base case estimate is for 2012 EPS of USD

0.17 The supply sector trades at 2012

median P/E of 13x

(24)

(25)

Investment case

–

the high exposure to oil and gas prices

–

a project backlog that will generate top line growth

–

RRR of 117% in 2011, and above 1 the next 6-8 years

–

exploration success in Norway and internationally

–

more than 12 high impact wells planned for 2012

–

reducing risk in balance sheet

–

Statoil’s safe haven status – 80% of production in non

conflict area

Statoil NOK

152.9 Buy

(26)

Stepping up to Growth – 2.5mboe/d

We estimate that

Statoil will grow

volumes to

2mboe/d in 2012

…and more than

2.5mboe/d in

2020

Statoil -CMD 2011 goal Low High 2010A 1,888 2011E 1,847 2012E 2,011 3.2% 2% 3% 2013E 2,065 2014E 2,251 2015E 2,348 2016E 2,356 3.8% 3% 4% 2017E 2,424 2018E 2,550 2019E 2,586 2020E 2,558 3.1% 2.5mb/d 2.5mb/d FF forecast 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800

2010A 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

kboe/d

(27)

Exploration - turnaround in the upstream business

The last 2 years Statoil has been seeking early

access at scale – the group now has 100k km2

of international exploration acreage versus 30k

km2 previously.

More exploration risk - targeting larger

prospects but with lower chances of success

Recent exploration success

The wells to watch: More than 12 high impact

wells planned for 2012

–

Tanzania (Zafarani well spudded with results expected in

1Q 2012)

–

Gulf of Mexico (Bioko and Hummer Shallow prospects)

–

Canada (two/three exploration offshore off East Coast)

–

Norway (three/four wells on Aldous Major North and

South)

–

Norway (Skrugard-2 appraisal well in 1Q 2012)

(28)

Our estimated reserve base

In 2011, Statoil replaced 117% of its reserves

We estimate the RRR be between 115-185% in the 2012-2017 period

The Johan Sverdrup alone offers exposure to 0.7-1.32bnboe of net resources,

translated to recoverable reserves this represents ~20% of current proven

reserve base

The 2020 volume target of 2.5mboe/d will require upstream investments to

increase from around $15bn to $18-20bn

(mmboe) 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Proved reserves 6,010 5,584 5,408 5,323 5,426 5,527 5,781 6,067 6,210 6,684 7,363

Production mmboe -632 -648 -652 -621 -603 -675 -704 -740 -770 -775 -795

Purchase/Sales/Chg. in interest 0 -9 -4 12 50 0 0 0 0 0 0

Revisions and improved recovery 325 213 326 183 255 200 250 225 230 230 225

Extensions & Discoveries 215 17 155 343 400 577 708 802 683 1019 1249

RRR (%) 84 34 73 87 117 115 136 139 118 161 185

All-in F&D cost ($/boe) 18.2 47.1 24.6 23.5 20.6 20.6 17.7 17.5 19.7 15.6 13.2

(29)

NOK billion

new

old

change

EBIT, adj

219

204 7%

PTP

211

199 6%

EPS, adj

19.1

18.1 5%

Production

2,015

0%

Oil price

$107.4

$107.8

0%

Gas price

2.07

2.05 1%

USD/NOK

6.01

6.01 0%

Oil price NOK

646

648 0%

2012E

Key figures

We have adjusted our 2012 estimates up

by approximately 5%

The main reason is; lower opex and

depreciation in 2H12

Key figures (NOKm )

2009

2010

2011E

2012E

2013E

Revenues

465,433

530,503 669,910 657,232 662,307

EBIT, reported

121,640

137,711 211,738 218,937 218,112

EBIT, adjusted

130,800

142,800 179,900 218,953 218,108

PTP

114,890

137,274 213,789 211,354 208,912

EPS reported

5.8

12.1

24.6

19.1

18.3 EPS adjusted

12.1

13.2

15.9

19.1

18.3 DPS

6.0

6.25

6.50

6.75

7.25 Production mmboed

1,962

1,888

1,851

2,015

2,065

Oil price, $/bbl

$58.3

$76.4

$105.7

$107.4

$110.1

Gas price, NOK/Sm3

1.89

1.71

2.06

2.07

2.23 P/E reported

25.2

10.9

6.0

7.2

7.0 P/E adj.

12.0

10.0

9.2

7.2

7.0 P/BV

2.3

1.9

1.7

1.4

1.1 ROE

9%

19%

36%

22%

18%

ROACE

8%

13%

24%

16%

14%

Sensitivity 2012 E

Base case EPS estimate 19.1 EPS change

+ 10 USD oil price 2.4 + 10% gas price 0.7 + 10% NOK/USD rate 2.3

(30)

Valuation

The target is predicated on a

$112/bbl -$111/bbl 2011-2012 Brent

oil price assumption. We have a

long-run oil price estimate to

$100/bbl from 2014 onwards

We have a UK natural gas price

estimate at 58p/th in 2012 and

60p/th in 2013

Valuation indication at various oil prices

212 198 186 174 162 149 135 122 NOK 100 NOK 120 NOK 140 NOK 160 NOK 180 NOK 200 NOK 220 $120 $115 $110 $105 $100 $95 $90 $85 Oil price 2011 -> N O K p e r sh ar e

Statoil Units 2009 2010 2011E 2012E 2013E

Oil production NCS 1000 boed 784 705 693 690 650 Gas production NCS 1000 boed 666 669 624 663 695 Oil & gas production Int. 1000 boed 341 332 335 408 446 Entitlement production 1000 boed 1,791 1,706 1,651 1,761 1,791

PSA effect 172 181 199 250 274

Equity production 1000 boed 1,962 1,888 1,851 2,011 2,065 Oil price (realized) USD/boe $58.3 $76.4 $105.7 $107.4 $110.1 Gas price (realized) NOK/Sm3 _1.89 _1.71 _2.06 _2.07 _2.23

Op. cash flow NOK mill. 173,500 173,000 224,000 260,600 261,400 Net Capex " (75,400) (76,500) (88,700) (95,200) (91,300) Tax paid " (100,500) (92,300) (112,600) (150,700) (151,100) Net cash flow " (2,400) 4,200 22,700 14,700 19,000

DPS 6.00 6.25 6.50 6.75 7.00

Dividend payments " (23,100) (19,100) (19,900) (20,700) 0 Cash flow " (25,500) (14,900) 2,800 (6,000) 19,000

DCF valuation WACC assumptions

NPV 2012-2013 NOK bn 21 Equity beta 1.1

NPV 2014+ " 639 Debt to capital 33% Net debt 4Q11 " -70 Cost of equity 10.0 % Equity value " 590 Cost of debt 6.0 %

(31)

Underperform portfolio

(32)

Sell

Target NOK 4.30

Golden Ocean

(GOGL)

NOK 5.58

21 February 2012

Golden Ocean shares are UP ~45% YTD

Baltic Dry Index is down ~56%

Clarkson’s average daily Capesize

earnings down 90% to USD 3,400 since

late December

Clarkson’s average daily Panamax

earnings down 42% to USD 5,440 since

late December

Collapse in cashflow for shipowners and

-operators

–

Increasing risk of bankruptcies and

charter defaults

Golden Ocean has a solid cash position

and long-term contracts

–

But value of company is tightly

dependent on these contracts

remaining in place

–

A number of deals were

renegotiated during 2011, putting

pressure on earnings and valuation

(33)

Dayrate development

Capesize spot average

Panamax spot average

0 50 100 150 200 250 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 S p o t r a te (U S D 1, 00 0) Max/min (1995-2 011) Ave rage 2011 2012 0 10 20 30 40 50 60 70 80 90 100 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 S p o t r a te (U S D 1, 00 0) Max/min (1995-2 009) Ave rage 2011 2012

(34)

(35)

Strong share price recovery

–

The rebound in LME prices recently has sent Norsk Hydro up

from NOK 25 to above NOK 30, outperforming the LME price

recovery

–

The share price seems to factor in an aluminium margin

around USD 400/ton corresponding to an LME price of

USD~2400

Supply/demand balance expected to keep a lid on

prices through 2012

–

Supply/demand balance expected to remain stable in 2012 vs.

2011 levels

– MB expect excess supply of 500 000, Alcoa excess demand of 600 000

Bauxite & alumina unit costs

down possibly on some

“one-off” items or special variations in numbers and we

expect a slight rebound in 1Q before further cost decline

through 2012

NHY versus LME price from 1. Dec 2011

Neutral

Target NOK 32

Norsk Hydro

(NHY)

NOK 33.9

February 21, 2012

(36)

EBITDA forecast trend negative for Q4 / flat 2012

–

4Q EBITDA forecast 4% lower than consensus

Norway impacted by campaigns in Q4

Weak Vimpelcom operational numbers push down 2012 EPS

–

Vimpelcom forecasts 6% negative impact on EPS

Weak cash flow Q4

Very risky situation with Vimpelcom i Q1/Q2

India/Bangladesh 2G licence case likely with adverse result

Three 3G licence rounds coming up in 2012 – heavy cash drain

Telenor

NOK 102 Sell

(37)

Vimpelcom accord leaves Telenor as vulnerable

With accord, Telenor raises its voting stake to 36.3%, but Altimo/Sawiris

still har de facto control with 49.3%

The call option is not exercisable until 2015, no protection

Telenor says ’partnered’ with Sawiris, but we remain sceptical as

loyalties shift rapidly

Worst case scenario of Telenor injecting 12b into VIP is eliminated, will

be ’only’ NOK 2b, though we do not believe this was discounted

We fear Telenor is as vulnerable to diluting and value depriving

transactions as before and do not see this as a relief

(38)

38

Switch cases

(39)

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