CFA Institute Research Challenge
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The CFA Institute Research Challenge is a global competition that tests the equity research and valuation,
investment report writing, and presentation skills of university students. The following report was prepared in
compliance with the Official Rules of the CFA Institute Research Challenge, is submitted by a team of university
students as part of this annual educational initiative and should not be considered a professional report.
Disclosures:
Ownership and material conflicts of interest
The author(s), or a member of their household, of this report does not hold a financial interest in the securities of
this company. The author(s), or a member of their household, of this report does not know of the existence of any
conflicts of interest that might bias the content or publication of this report.
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the subject company.
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The author(s) does not act as a market maker in the subject company’s securities.
Disclaimer
The information set forth herein has been obtained or derived from sources generally available to the public and
believed by the author(s) to be reliable, but the author(s) does not make any representation or warranty, express or
implied, as to its accuracy or completeness. The information is not intended to be used as the basis of any
investment decisions by any person or entity. This information does not constitute investment advice, nor is it an
offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a
recommendation by any individual affiliated with CFA Society Denmark & CFA Society Norway. CFA Institute,
or the CFA Institute Research Challenge with regard to this company’s stock.
1
INVESTMENT SUMMARY
Nordic is a fabless semiconductor company specializing in wireless
technology that powers the IoT. The company was established in 1983 in
Trondheim, Norway and currently employs 1079 workers, with 77% of the
workforce employed within R&D. In 2020 Nordic reported a total of USD
405m in revenue.
Recommendation
Recommendation
SELL
Date
01.12.2021
Current Price
NOK 310
Target Price
NOK 218
Industry
Semiconductor
Ticker
NOD
Stock Exchange
Oslo Børs
Downside
30%
Shares Outstanding
190.96m
Market Capitalization
NOK 41.6 B
EPS (2021)
NOK 2.35
We reckon that the market has overvalued the company given the market
potential, fundamental value, competition, and substitution risk. With a
current share price (01.12.2021) of NOK 310 per share our conclusion is
therefore
a
SELL recommendation.
We
value
the
stock
at NOK 218 per share which indicates a 30% drop from today’s price
level. The target priced is based on DCF model and Relative Valuation. In
addition, we use a Monte Carlo (MC) simulation to simulate a range of
possible values. Our sell recommendation mainly relies on 3 key drivers,
(1) Working Capital Issues, (2) order backlog and supply chain constraints
and (3) Industry Growth Expectations.
Working Capital Issues
Nordic has a lot of capital tied up with inventory and receivables. If you
combine this with short period of payables, this makes the liquidity cycle
worse than necessary. Although their receivables and the credit period are
decreasing, the number of days of inventory at hand is increasing. This
force Nordic to keep piles of cash on its balance sheet resulting in lower
growth opportunity because the cash is tied up. During 2014-2020, the
average number of days Nordic had accounts receivable in hand was 63
days and the average cash conversion cycle from 2016-2020 was 163
which reflects what already suggested. We predict that this will become an
even bigger problem because the continuous struggles of Covid-19.
Unable to fully deliver on order backlog & supply chain
constraints
Team research
The market suggests that Nordic will be able to fully deliver on $1.3b order
backlog, which we think is unreasonable. The current wafer shortage makes
it unlikely that Nordic will be able to deliver fully on its order backlog and
we expect the backlog to be pushed further out, delaying future revenues.
This in turn, might lead to less than expected investments in both R&D but
also other important parts of the company. Also, we expect the ongoing
“supply chain crisis” that started with Covid-19 to continue into 2022,
further delaying the revenues and capabilities to deliver on revenue targets.
We believe the order backlog is inflated due to the semiconductor shortage
and suspect the customers have ordered more than they need to get ahead
in the long que and secure their orders.
From Nordic reports
Billions
Global Bluetooth LE & Ceullular IoT
Market
20,00
15,00
10,00
5,00
2018
2020
Bluetooth LE
Team research
2022
2024
2026
2028
Industry Growth Expectations
The Bluetooth LE and the cIoT market are expected to grow with a CAGR
of 20% and 21.4% until 2027 and have a total market capitalization of
USD 20.4b and USD 14.2b respectively. While assuming Nordic will grow
their business at the same rate or even if they can gain market share in
both segments, the enterprise value would not reach the value of today.
We therefore believe that the market has overestimated Nordic’s potential.
This confirms our view on the current share price.
Cellular IoT
2
BUSINESS DESCRIPTION
Business Segments
Currently Nordics specialty and main business area lies within the subgroup
Bluetooth LE which can be found in almost all wireless technological
devices we use today. This award-winning technology have made them the
market leader within the segment and accounts for 78% of their revenues.
The rest is made up from Wi-Fi and cIoT business segments. Further, Nordic
is considered a first mover within the next big wave of semiconductors,
Cellular IoT (cIoT).
From Nordic reports
Customers and End-Product application
Nordics products can be found in all sorts of wireless gadgets and
equipment we see around us. They also have an impressing customer
portfolio. Ranging from Amazon, Microsoft, Google, Apple, Samsung,
Tencent etc. This is probably the reason why most of their sales is in
consumer electronics. With the investments in cIoT Nordic will hopefully
grow other areas of their business, and look to expand their current
segments within monitoring buildings, healthcare etc. Currently, 41% of
revenues is within the consumer electronics, 21% withing building/retail,
16% comes from wearables, 10% comes from healthcare and 10% comes
from other areas.
From Nordic reports
Business Strategy
Nordic strives to maintain the position as the leader within the Bluetooth
LE market but also diversify its income stream by focusing more on other
technologies such as Wi-Fi and specially cIoT. To achieve the goal, they
must invest more in R&D than competitors which they indeed do. The big
bulk of future R&D are expected to be allocated from Bluetooth LE into
cIoT. While 77% of the workers are currently working in R&D, Nordic has
great potential to capture this market. The back of the coin with such a big
part of its workforce and revenues goes into R&D, it will be more difficult
to realize gains on potential innovation. More investment in R&D means
that there is an alternative cost by not investing in other parts of its
business such as sales, marketing, new offices, etc. In addition, a great
chunk of the payroll will be tied to R&D which indeed will limit the
cashflows.
From Nordic reports
Acquisition of Wi-Fi technology and development team from
Imagination Technologies
At the end of 2020 Nordic acquired the Wi-Fi assets and development team
of Imagination Technologies. The key objective of this acquisition was to
exploit the synergies between the team’s unique expertise and Nordic’s low
power technology. Supposedly to strengthen future product portfolio to
gain a higher market share within the Wi-Fi segment.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Environment
Since Nordic is a fabless semiconductor producer, they don’t emit much
CO2 and other emissions directly. However, the producers such as Taiwan
Semiconductor Manufactoring Company (TSMC) is a huge consumer of
energy, water, toxic chemicals, and other hazardous waste. The majority of
TSMC’s factories are in Taiwan and China where most of the energy mix
3
consists of fossil energy sources such as coal, oil and natural gas. The
business is also hugely water intensive with the use of 38 liters for a single
computer chip. The industry also has a big problem with its wastewater
and hazardous waste. Even though Nordic argues that their products are
used in monitoring emissions and consumptions, they can hardly be
classified as a green company. Since most of the companies in the sector
is using the same suppliers, it is hard to claim environmentally superiority
among the companies. However, Nordic is aware of this situation and are
trying to work with their suppliers to reduce their environmental footprint.
From Nordic reports
Social
Nordic is trying to participate in several measures for a more social world.
However, not all measures are perfect yet. When it comes to gender
balance, 86% of their employees excl. executive management team are
men. They score better on diversity with 42 different nationalities
represented at the company's headquarters. To cope with the gender
imbalance, they have initiated several measures to cope with this. Among
this is a program that is trying to promote engineering studies for women
at the local university NTNU in order to attract future female employees.
From Nordic reports
One big issue the semiconductor industry is facing, is conflict minerals.
Minerals like 3TG (Tin, Tungsten, Tantalum and Gold) and Cobalt are often
extracted in countries like Democratic Republic of the Congo (DRC) where
rebel groups, armies and other outsiders has benefited from the extraction,
resulting in more corruption, conflicts and bribery. To reduce this issue,
Nordic has a Conflict Mineral program where they follow the guidelines of
OECD to ensure no direct or indirect financing of conflicts in the DRCregion.
Governance
From Nordic reports
Percentage ownership per country
From Nordic reports
We believe that Nordic has a sound corporate governance structure. They
comply with the Norwegian Corporate Governance Structure (NUES), which
ensures a good way of practicing Corporate Governance in Norway. Further
Norwegian law prohibits the CEO from serving as the chairman which will
mitigate interest of conflicts. Under the 2020 annual report there has been
no deviations from the code of practice which is a sign of a company with
a well-functioning internal governance structure. Some of the board
members are working in two different sub committees as the people and
compensation committee which ensures that key talent and the
management group gets a competitive remuneration for their work. The
other is the audit committee which oversee the accounting, financial
reporting, and internal and external auditing. This gives the board members
a clear structure of order to prevent adverse practices in the company. The
members of the Board of Directors have a diverse background putting
Nordic in a better position for future changes in the semiconductor
industry. Overall, the company seems to have a good practice for dealing
with corporate governance.
INDUSTRY OVERVIEW
The semiconductor industry is the aggregate of companies engaged in the
design and fabrication of semiconductors and semiconductor devices. As
the electronic devices is widely used in modern society. The semiconductor
products build a key block in the electronic devices with high-added value.
The global electronic manufacturing services (EMS) market was USD 468.9
billion in 2020, and it is projected to grow from USD 500.3 billion in 2021
4
to USD 849.7 in 2028 at a compound annual growth rate of 7.9% after
economic recovery from pandemic.
Demand Drivers
The semiconductor sector is booming, and we expect a strong industry
growth in the upcoming decade due to our three key demand drivers: 1)
technological growth, 2) digitalization, and 3) hybrid office solutions.
From Nordic reports
•
Technological growth
The industry had a breakthrough in technology adoption in the
healthcare sector. Covid-19 generated a wave of new
technological products for testing, disease detection and
prevention, monitoring of social distancing, and a more effective
vaccine delivery. Great potential growth in the smart home
market. Bluetooth and multiprotocol combined products can
enable thousands of different devices to connect with smart home
hubs. The future awaits many technological innovations that will
need IoT and Bluetooth.
•
Digitalization
The pandemic has fast-forwarded the digitalization process in
several sectors by many years. Sectors like healthcare do now see
the value added by their connected medical devices and
monitoring solutions. Especially, undeveloped countries have a
big potential when it comes to digitalization. Most of the
countries are decades behind developed countries and will catch
up in the upcoming years.
From Nordic reports
•
Hybrid Office Solutions
Due to the pandemic, the level of hybrid offices has increased. In
result, workers do now have a much more flexible office hours and
can work from several locations. The changes in work practices
have indeed increased the need for home office solutions,
supporting the growth for both Bluetooth LE and proprietary
products. Also, the market for gaming and entertainment had a
significant growth during the pandemic, which consists of very
similar products.
Supply Drivers
As a fabless semiconductor company, Nordic rely on supply of wafers and
other components from their suppliers. However, there is an increase in
the demand/supply imbalance through the semiconductor value chain due
to temporarily limited global supply of wafers, and this will put caps to
the wafer allocation in the upcoming years. The supply chain has indeed
interrupted during the pandemic and is still in an ongoing uncertain
future.
Nordic’s products are manufactured and assembled at subcontractors in
Asia and delivered to their customers by regional and global distributor
partners.
To summarize our industry analysis, we expect future growth by higher
demand in technological innovations, digitalization from both developed
and undeveloped countries, and hybrid office solutions that will continue
even after the pandemic. However, we expect the pandemic to further
disrupt the supply chains in the future, which indeed will make it difficult
to take full advantage of the strong demand.
5
COMPETETIVE POSITIONING
Leading the Bluetooth LE Market
Nordic has a superior Bluetooth LE technology, with a market share of 45%
in their market. Since it is expected that the world will demand a lot more
technological gadgets in the future, we expect Nordic to harvest big
revenues from this segment. Their long-time research focus in this area
makes it easy to harvest the revenue without investing too much money in
further development, maximizing the cash flow to their shareholders.
SWOT Analysis
•
Strengths
Currently Nordic has 45% of the market share in the Bluetooth LE
segment and is considered a leading vendor of wireless connectivity
and embedded processing solutions for IoT.
•
Weaknesses
Because the company is located in Norway, there are several
weaknesses Nordic has when compared to its peers. First, the cost of
labor in Norway is very expensive compared to US, Germany etc. We
therefore consider this a weakness. With rising inflation in Norway and
the interest rates are set to increase, we believe that the market has
not taken this into its consideration when valuing the stock. Also,
another disadvantage of being headquartered in Norway is that there
are limits on the human capital available. If we compare Norway to the
US, the US has more qualified workers. The cost of recruiting foreigners
is also high.
•
Opportunity
The biggest opportunity for Nordic is the Cellular IoT market. With the
Cellular IoT market set to reach a market value of 14.2b by 2027,
Nordic have a huge opportunity in this segment. In addition, the
development of new technology and devices requiring semiconductor
will make new business opportunities for Nordic.
•
Threats
The risk of Bluetooth being replaced (unattractive compared to other
technologies) is quite a big concern for Nordic. If Nordic is unable to
swiftly change their core product in the event of technology
replacement, the threat of substitution is of high magnitude. The
biggest immediate threat comes from different Wi-Fi standards tightly
integrated with Bluetooth in combo-chipset. Other wireless standard
such as UWB, might rather be a long-term risk in some of the verticals
where Bluetooth is dominant today. We also consider the ongoing
uncertain pandemic to pose a threat against the semiconductor
industry and Nordic.
FINANCIAL ANALYSIS
Increased revenue with competitive products
We expect Nordic to gain market share due to their competitive
semiconductors. Bluetooth has long been a key driver for the company’s
revenue, and we still believe this will be the case in the future. However,
we also strongly believe that their focus on R&D in the cellular IoT will
6
materialize in an even higher growth in this segment. We expect a high
growth rate in the coming years due to the order backlog and increased
demand for Nordic products, but that they don’t fully manage to profit on
an inflated order backlog. The average revenue CAGR from 2014-2020
was 15.9%. This year we expect the revenue growth to be
around 45% based on stipulation of the Q1-Q3 reports available at
present time. After that we expect a gradually decline in revenue growth.
The estimated growth is above the calculated CAGR of 18% between
2020-2027 based on consultancy reports. This is based on the fast growth
of cIoT and gained market share in Bluetooth LE. The terminal growth rate
has been set to 2.5% which is roughly in line with the expected increase in
global GDP.
Costs in line with historic average
Team research
We expect cost of materials and other operating costs to move in line with
the revenue growth. Cost of materials has been set to 50% of revenue
which is the average of the previous years. Since Nordic is a fabless
producer, we don’t expect to see any big changes in the future. Salary
growth is expected to grow fast in the next couple of years due to more
R&D resulting in a demand for more researchers, before gradually declining
to a steady state level with few new employees. We believe that the number
of employees will grow slower than the increase in revenue, due to their
already high focus on R&D. This will improve future EBIT- and EBITDAmargin significantly.
Other cost drivers
Based on our hypothesis that the number of employees will not grow as
fast as revenues; we also believe that operating non-current asset (ONCA)
will also decrease as a percentage of revenue. However, operating current
assets (OCA) is something that most likely will grow in the same pace as
revenue. This post contains inventories and receivables. Unless they
manage to decrease their inventories in percentage or they manage to
decrease the time of credit the costumers get, it looks like a reasonable
assumption.
Keeping a zero-dividend policy
Nordic issued new equity of NOK 1.144 billion in September 2020; hence
they are well capitalized for the future. Apart from 2014 and 2015 they
have had very little net interest-bearing debt (NIBD). Tech-companies often
relies most on equity and less on debt. This is because most of its values
are intangible, like patents, and their employees. These assets often have
very little value if the company is liquidated or goes bankrupt. Hence, banks
are often reluctant to lend to such companies. Dividends are also something
we have set to zero in the future. This is based on the assumption of newly
raised equity and that they have big growth opportunities. Due to the
assumptions made above, we see that many of the liquidity ratios are
relatively stable or grow over time.
VALUATION
By analyzing Nordic’s three financial statements and their future
opportunities in terms of growth, we find a fundamental value that does
not justify their current share price of 310 NOK. Our assumptions and
calculations give Nordic a fair share price of 218 NOK. In result, we
conclude that the market is overestimating their values based on unlikely
high future growth, both in revenues and in the terminal value.
7
Cost of capital
To arrive at the cost of capital, we use the Norwegian 10 years bond as a
proxy of the risk-free rate, which is currently 1.47% . The market risk
premium is 5%, as found in a recent report from PwC, estimating the market
risk premium in the Norwegian market. 5% is also in line
with Damodaran’s estimate of market risk premiums for mature markets.
The unlevered beta we use is from Nordics four closest competitors. The
number we get is 1.15. Since Nordic does not have any net interest-bearing
debt, we set the required rate of return on equity equal to the WACC. The
reason for no net interest bearing debt, is due to the equity raise done last
year by the company. Tech-companies are known for a low debt ratio since
their biggest assets often are their employees. This is not visible in the
balance sheet and hence makes it difficult to obtain a bank loan, unless
supported by a strong cash flow. In this case we arrive at a WACC and
return on equity at approximately 7.2%.
Team research
DCF valuation
We use both free cash flow to firm (FCFF) and free cash flow to equity
(FCFE) to get the market value of Nordic. This allows us to model the future
cashflows to Nordic quite detailed. In the next years to come we have
projected a high growth rate that would eventually drop until it reaches
terminal growth rate in 2031. The reason we have modelled such a long
time period is that we believe that Nordic has a high growth potential in
many years to come before it reaches a more mature phase. The growth
rate we have estimated is based on consultancy reports of the growth rate
in the different sub areas of the semiconductor industry. The next year we
estimate a growth rate of 45% that is justified based on this year Q1-Q3
revenue growth. The next years after that is also higher than the estimated
CAGR of 18% between 2020-2027 from the consultancy reports, if we
assume that Nordic keeps their market share.
The terminal growth is set to 2.5% based on what we believe will be the
long-term GDP growth in the world will be. When all these assumptions are
summed up, we get a share price of NOK 207 based on FCFE and NOK
218 based on FCFF.
Monte Carlo Simulation
Team research
We perform a Monte Carlo simulation with 100,000 trials, testing our key
input factors listed below, to test the share price fluctuations under
uncertainty. By varying the revenue excl. terminal growth, terminal growth,
cost of goods sold and WACC. We found that the probability of the stock
to be higher than today's share price (01.12.2021 @ NOK 310 pr share)
to be 3.5%, and that in 96.5% of the trials, the share price were below
todays (01.12.2021 @ 310).
Sensitivity analysis
We analyze our DCF model’s robustness to changes in our key input factors:
revenue excl. terminal growth, terminal growth, cost of goods sold and
WACC, to determine their effect on our SELL recommendation. We can
clearly see that the most sensitive variable is the WACC and the revenue
growth, which makes sense because Nordic is a high growth company
where most of its earnings lies many years into the future. (Appendix C2)
Relative Valuation
Team research
We can see from the relative valuation that today’s price of NOK 310 is
very high compared to its closed competitors. Only under P/B and trailing
P/E it is possible to justify a slightly higher price than the current share
8
price. This indicates little potential for a higher share price but seems rather
as s sign for an overpriced company.
INVESTMENT RISKS
Four major risks are identified in Nordic: strategic, market, operational and
financial risks. Some of the risks are out of Nordics control, including
industry and cyclical risk.
Strategic risks: uncertainty for future demand
(Probability: Moderate, Impact: Moderate)
SR1. Geopolitical Risk:
Risk matrix
Geopolitical risk and trade tensions could reduce demand for Nordic
products. For instance, the ongoing trade war between US and China, can
impact Nordic negatively.
As a fabless company, Nordic heavily rely on its main supplier in Taiwan.
Due to the geopolitical sensitivity for Taiwan, the tensions between US and
China could disrupt Taiwan and it´s supplier’ production.
Mitigation:
They actively monitor the geopolitical situation and is taking action to
reduce the impact. E.g., supporting in optimizing the value chain of
customers and place early orders to secure supply chain. Although the
risk is hard to predict and out of control, it´s more likely a long-term
nature and low probability to occur in the short run. We believe Nordic is
working adequately to reduce the impact, but not fully hedged.
SR2. Cellular IoT:
Although Cellular IoT segments has grown explosively since 2020 (changes
524.3%). There´s still risk that they may be not successful in the executive
strategy to capture the cellular market opportunity in terms of time, scale,
and volume. In addition, customers may choose other low power wide
range network technology or cancel due to unavailable technology. It´s
long-run nature.
Mitigation:
Nordic has integrated many different technologies into a very small
System Package, which could improve the efficiency significantly than any
comparable products in the market.
In addition, they focus on delivering user-friendly products and working
closely with regulators and carriers to remove barriers to entry, but we
believe it´s not adequate to avoid the risk.
Market Risks
(Probability: High, Impact: High)
MR 1. Subject to high Industry cyclicality:
Due to the cyclicality of semiconductor industry, Nordic has high volatility
in the business and financial results. In downmarket, Nordic´s
business could be significantly impacted by demand and declined selling
prices. In the upmarket, they can experience periods of increased
demand and manufacturing constrains.
Mitigation:
They monitor actively the macroeconomy and make necessary supply chain
adjustment to optimize the production in align with the demand, price
level and inventory. But we believe it´s not adequate to avoid.
9
MR 2. Threat of current competitors and new entrants:
Nordic faces strong competition in the industry in terms of price,
functionality, and software solutions. In addition, they don´t specialize in
specific or niche sales market especially in verticals, which made Nordic´s
market share unstable and hard to gain high price premium. Compared with
other competitors in terms of the size, R&D and financial results, Nordic is
not in a preferable position. Meanwhile, they also face competitions from
new entrants in short and long run.
Mitigation:
They continue to invest in products, software, and strategic partnership to
maintain competitive advantage. Nordic´s multiprotocol portfolio ensures
company is well positioned and more flexible in compatibility across
different standards.
In addition, Nordic is high focus on R&D, which is perquisite to maintain
advantage, but not guaranteed.
Operational Risks
Heat map
(Probability: Low, Impact: High)
OR 1. Supply chain disruption and quality control risk:
Nordic is a fabless company and rely on third-party producers and
distribution partners for sales. The failure of third-party to deliver the
products could damage revenue in short term and customer relationship in
the long run.
Mitigation:
Nordic try keeping a buffer stock of components and finished products to
deal with short -term demand. In the midterm to long run, Nordic seeks to
a second sourcing and insurance for supply disruption. In addition, Nordic
has also own testers, which could improve production and make sure
quality in both short and long run adequately.
OR 2. Product ramp:
Nordic may fail to ramp or strategic design new products according to
customer´s requirements, resulting failure to meet customer requirements
and great losses. It could be short-run and long-run nature.
They have tight control over new product Introduction process; They
strengthen quality control during high products ramps and heavily invest
in failure Analysis lab to solve issues quickly and effectively.
OR 3. Working capital issue:
Nordic has an average account receivables of 63 days between 2014 and
2020 and an average cash conversion cycle of 163 days between 2016
and 2020. Meanwhile, A big proportion of capital in R&D, which is
expected to increase continuously to keep sustainable comparative
advantage. Hence, the working capital and cash flow could be a serious
problem coupled with Covid-pandemic.
Mitigation:
We think they haven’t solved the problems effectively.
Financial risk
(Probability: Low Impact: Moderate)
FR 1. Foreign currency risk:
As revenue and direct production costs are almost just denominated in
USD, whereas operating expenses are in NOK and EUR. Hence, they could
be subject to exchange rate fluctuation in both short run and long run.
10
Mitigation:
They can use derivative financial instruments to reduce its exposure to
currency exchange rate movements.
FR 2. Credit risk:
Nordic is exposed to credit risk related to both distributors and endcustomers. The main counterparties are leading distributors of electronic
components based in Asia, but the company has not suffered any
significant credit losses historically. So, the credit risk has relatively low
probability to occur.
Mitigation:
Credit monitoring routines are integrated into any new credit lines,
requiring security in the form of payment guarantees or advance payment
requirements if needed. Considering the low probability, we believe
that their measures could be adequate.
11
APPENDIX
Appendix A – Glossary
b – Billions
CAGR – Compund annual growth rate
CE – Capital employed
CEO – Chief Executive Officer
cIoT – Cellular Internet of things
CO2- Carbon dioxide
DCF – Discounted cash flow
EBIT - Earnings before interest and taxes
EBITDA – Earnings before interest, taxes, depreciation, and amortizations
EUR – Euro (currency)
FCA – Financial current assets
FCFE – Free cash flow to equity
FCFF – Free cash flow to firm
FNCA – Financial non-current assets
IBD – Interest bearing debt
LE – Low energy
m - Millions
NFA – Net financial assets
NOA – Net operating assets
NOK – Norwegian Krone (currency)
NONCA – Net operating non-current assets
NOPAT – Net operating profit after taxes
NOWC – Net operating working capital
OCA – Operating current assets
OCL – Operating current liabilities
OECD – Organization for Economic Co-operation and Development
ONCA – Operating non-current assets
ONCL – Operating non-current liabilities
P/B – Price-to-book ratio
P/E - Price-to-earnings ratio
PEG - Price-to-earnings-to-Growth ratio
Q1- Quarter 1
12
R&D – Research and Development
ROIC – Return on invested capital
TA – Total assets
USD – US Dollar (currency)
WACC – Weighted average cost of capital
Appendix B1 – Income Statement
Appendix B2 – Balance sheet
Appendix B3 – Cash flow statement
13
Appendix C1 – Discounted cash flow models
Appendix C2 – Sensitivity analysis
14
Appendix C3 – Monte Carlo simulation
Appendix C4 – Relative Valuation
15
Appendix D – Ratios for Nordic
16