In a recent analysis, DNB Markets raises the price target on Kjell Inge Røkkes Aker to NOK 870, up from the previous NOK 775 per share. share, and repeats the buy recommendation.
Analyst Jon Masdal justifies the upward adjustment by saying that Aker is currently trading at a 23 percent discount to net value-adjusted equity (NAV), the highest discount the company has had in four years.
– I think the discount was so big that it was worth flagging. At today’s course, you get Cognite, Aize and Aker Energy for free, companies we believe are of great value, says Masdal to Finansavisen.
Believe in the unlisted
Masdal highlights Aker Energy as a somewhat forgotten company, which can accelerate with higher oil prices. He also finds the software company Aize exciting, and points out that only if it delivers, there is a significant upside from book value (as of the second quarter booked at NOK 384 million, editor’s note). Cognite, in which Aker has an ownership interest of 50.5 per cent, was valued at NOK 6.6 billion in the half-year report.
- Industrial investment company with headquarters in Fornebu.
- Got its current company form after Aker merged with Kjell Inge Røkke’s RGI in January 1997.
- Has ownership in, among others, Aker BP, Aker Solutions, Kvaerner, Ocean Yield, Aker Energy and Aker Horizons.
- The CEO is Øyvind Eriksen.
- The largest shareholder is Kjell Inge Røkke through TRG Holding.
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According to the brokerage’s estimates, Aker’s current market value is below the value of the listed holdings. Several of Aker’s listed assets have risen sharply in recent times, here the brokerage’s expectations for further upside are moderate. For example, the oil company Aker BP is up 47.80 per cent so far this year to NOK 308.80, and the oil service giant Aker Solutions is up 32.80 per cent to NOK 21.85 so far this year.
At 11 o’clock on Friday morning, Aker had a market capitalization of NOK 56.56 billion, and the share was traded at NOK 762.
The price target of NOK 870 still implies a NAV discount of 10 per cent.
Masdal thinks this is attractive, as comparable Nordic investment companies that are currently trading at a 3 percent premium over reported NAV,
Renewable renewable
- Investment companies that exercise active ownership in companies within renewable energy and low-carbon solutions.
- The company owns 51 percent of the shares in both Aker Offshore Wind and Aker Carbon Capture, and has an ownership interest in REC Silicon.
- Aker Horizons also has industrial ambitions in areas such as hydrogen and other green technology.
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However, the group’s renewable arm Aker Horizons is downgraded from “buy” to “hold” and the price target is reduced from NOK 40 to 33.
“Given that the company is now moving into a new phase, we believe that the current premium to NAV of 24 percent is too high – and also has little further upside potential,” writes Masdal according to TDN.
As a result of the market situation in the renewable and cleantech sectors, the brokerage expects that Aker Horizons will in future work to develop the companies they already have in the portfolio rather than launching new investments.
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