In an August 20 research note, Pareto Securities analyst Tom Erik Kristiansen presented 10 reasons to buy Aker ASA (AKER:Oslo), a Norwegian industrial investment company. Aker owns interests in oil and gas, renewable energy and green technologies, maritime assets and biotechnology, and industrial software businesses.
The key reasons to invest in Aker, according to Kristiansen, are:
1) Value creation. Aker has a strong history in this regard, achieving a 23% return over the past 10 years, more than double that of OBX companies, the 25 most liquid companies on the Oslo Stock Exchange's main index.
"We think future value creation will be high as Aker's industrial capabilities can support new renewables growth initiatives," Kristiansen wrote.
2) Discounted price. Compared to its Nordic peers under Pareto's coverage, Aker is priced at a discount. Whereas the average discount to net asset value for Aker's peers is –12%, for Aker it is 19%.
3) Balanced portfolio of companies. Aker Horizons, now 17% of Aker's portfolio, aims to invest NOK100 billion by 2025, "implying that Aker will hold an increasingly balanced portfolio for investors," wrote Kristiansen.
4) Growth in renewables and technology. Aker is rapidly growing the renewables and tech segments of its portfolio.
5) Upside in Cognite. Currently comprising 10% of Aker's portfolio, Cognite has significant upside potential, and the market still underappreciates it. Cognite helps large companies use their vast internal data to enhance their operation.
6) Seizing of opportunities. Aker "acts on opportunities like no one else," Kristiansen wrote. The company's actions in H1/21, including partnerships, collaborations, and agreements, were numerous. Most recently, Aker Horizons launched Carbon Capture as a Service.
7) Long industrial track record. With 180 years of building leading industrial firms, adapting to changing times and advancing complex businesses, Aker's chances of ongoing future success are high.
8) History of surprising on the upside.
9) Strong balance sheet. With solid finances and low funding, "Aker is well positioned to create value going forward," Kristiansen wrote.
10) Investor alignment. Investors in Aker are wholly aligned with the primary owner.
Pareto has a Buy rating and an NOK820 per share target price on Aker.
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Disclosures from Pareto Securities, Aug. 20, 2021
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Please find below an overview of material interests in shares held by employees in Pareto Securities AS, in companies where arecommendation has been produced or distributed by Pareto Securities AS. "By material interest" means holdings exceeding a value of NOK 50 000: Aker.
Overview over issuers of financial instruments where Pareto Securities AS have prepared or distributed investment recommendation, where Pareto Securities AS have been lead manager/co-lead manager or have rendered publicly known not immaterial investment banking services over the previous 12 months: Aker.