Valuation of Havila ASA

Henrik Stig Wilhelm Bredberg Lilliehöök & Felix Tord Alexander Steinbrecher

Student thesis: Master thesis

Abstract

The overall aim of the thesis is to determine the fair value of the Norwegian offshore supply vessel (“OSV”) company Havila Shipping ASA (“Havila” or the “Company”) per 26/02/2018. Together with its subsidiaries, Havila manages and operates offshore service vessels in all major regions. As of 31/12/2017, the company’s fleet consisted of 23 vessels including five within the anchor handling vessels, 14 within the platform supply vessels, one within rescue recovery vessels and three Subsea construction vessels. The OSV industry is highly dependent on the global E&P spending of the petroleum companies which in turn is driven by the oil price. Even if the oil price and the projected increase in E&P spending look more promising than in years, it is unlikely that the oil price will reach its pre-crisis levels, meaning that the OSV industry will not be able to enjoy satisfactory demand in many years to come. That in combination with an overall oversupply which results in depressed utilisation and freight rates constitutes a rather gloomy outlook for the industry, characterised by high competition among the existing firms. The challenging market in combination with Havila’s high financial leverage leaves the thesis to believe that the company’s share price will not recover in the foreseeable future. The intrinsic valuation approaches of this thesis result in a final share price of NOK 7.0 as per the valuation date, and when discounted forward to 26/02/2018 the share priced amounted to NOK 7.1. When comparing that to the traded share price of NOK 10.4 on 26/02/2018, a potential downside of 31% becomes evident. Consequently, this thesis concludes a SELL investment recommendation for Havila shares.

EducationsMSc in Accounting, Strategy and Control, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2018
Number of pages181
SupervisorsOle Sørensen