DOF ASA : an offshore service company organized for expansion

Abstract

The purpose of this thesis is a valuation of DOF ASA with a thorough analysis of the offshore service market. The valuation is based on public available information up until November 2010, and discussions with CFO Hilde Drønnen at DOF ASA. The market analysis is based on reports and presentations obtained from various Norwegian investment houses that cover the offshore service and subsea market. We will compile and use them as input in a market model. The market analysis concludes that the OSV market is currently under pressure. Many OSVs where ordered during the economic upturn prior to the financial crisis and is now entering the market. Improvement in OSV market is not expected before late 2011. The outlook for the subsea market looks better, and with attrition of old subsea vessels, the subsea market should maintain high utilization. The valuation is performed using 3 valuation methods: The Discounted cash flow method, net asset value method, and a peer view analysis. The conclusion of our valuation arrives at a fundamental value of NOK 72 per share. With a discount based on low liquidity and a controlling shareholder our target share price is NOK 58. The target share price offers a 29% upside potential compared to today’s share price, and we conclude with a buy recommendation.