Equinor due diligence report

Oto Suvari
Oct 25 · 3 min read

Hatchworks has conducted due diligence on Equinor, one of the largest Renewable and Non-renewable energy operator in Norway that is developing gas, wind, oil and solar power. It’s an international energy company that operates in more than 30 countries worldwide. It is currently listed on the Oslo Stock exchange under the symbol ‘’EQNR’’.

Financials — Equinor
(Source: Marketscreener.com)

Equinor’s current market cap is $61.5B and stock price is around $18.60.

With a predicted net-income growth of 8% for 2020E and 2021E, and a net income estimate for 2021E of in excess of $6.3B, this result in a P/E ratio of 9.60x. This outperforms markedly a competitor such as Genel Energy (GENL), which is projected to decline -11% for 2020E and 2021E.

The sales forecast for Equinor (EQNR) is $75.8B for 2020E, implying an EV/Sales ratio of 1.03x.

In terms of profitability, an operating margin of 22% is predicted for 2020E. This is moderately higher than competitors such as Royal Dutch Shell (RDSA).

Equinor offers a relatively good yield, namely 5.89% for year 2020E. A competitor like Royal Dutch Shell (RDSA) offers a yield that is slightly higher than Equinor, which is 6.30%.

It’s also worth noting that the Government of Norway is the largest shareholder with 67% of the shares, while the rest is public stock.

We conclude that the valuations look promising, offering a good yield, P/E ratio not too expensive, great margins and the company has historically done well during the recession, therefore Hatchworks is an investor.

The Hatchscore is 5.6 out of 10. Full details can be found on Hatchnet: www.hatch-net.com/companies


What is Equinor?

Equinor (formerly known as Statoil) is an energetic company which focuses on developing oil, gas, wind and solar energy. The Company explores, produces, transports, refines, and markets petroleum and petroleum-derived products, and other forms of energy.

Top Institutional Holders:

  • FMR, LLC.
  • Renaissance Technologies, LLC.
  • Earnest Partners, LLC.

Advisors and Bookrunners:

  • ABG Sundal Collier.
  • BofA Merril Lynch.
  • Citigroup Global Markets Limited.

What are the risks?

  • The energy prices along with the earnings are very dependent and driven by the supply and demand for worldwide energy.
  • The energy industry is linked to political events, which historically have led to volatility or wild fluctuations in the price of oil.
  • Government regulations and actions. Including changes in energy and climate policies.
  • If upstream resources are not developed to prove reserves in a timely manner, Equinor’s reserve base and thereby future production will gradually decline and future revenue will be reduced.

Competitors:

  • Royal Dutch Shell (RDSA).
  • Total (FP).
  • Genel Energy (GENL).

Management team:

  • Eldar Sætre: CEO.
  • Jannicke Nilsson: COO.
  • Lars Christian Bacher: CFO.

The Hatchwork Team

The forecast figures are based on the data of MarketScreener and not from Hatchworks: https://www.marketscreener.com/EQUINOR-ASA-1413290/financials/


Legal Disclaimer — This report summary has been generated as a result of Hatchworks’ proprietary company vetting and filtering system. The level of due diligence conducted on investible assets conducted ranges from mediocre to significant, the latter being the case where Hatchworks has explicitly taken strategic positions in. By no means is the information in this file to be relied on as investment advice; this includes Hatchworks’ algorithmic composite score known as ‘Hatchscore’. Hatchworks has not received any compensation for this research. For more information you can reach us at info@hatchworksvc.com. This report is not for distribution in the United States of America. It is closed to U.S citizens. If you are a U.S. citizen, you should delete this report or return to sender.

Oto Suvari

Written by

Research & Development at Hatchworks & Neuchatel Ltd. Heading up the group’s R&D activities for Hatchworks, SPECTRE (www.spectre.ai) and linked projects.

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