I would caution just a touch regarding the debt payoff. I think a level of maintaining 1-1.5x is suitable, as this would allow any or all of: dividends, buybacks, accretive acquisitions, investment in the fleet / new SESvs etc etc, whilst keeping debt repayments manageable. I just think that to be prudent we shouldn't expect there to be 0x debt. Also think that having that extra money (at 1 or 1.5x that's something over $100m) to 'play with' is a valuable thing |
With the present order book then in 3 years all of the debt would have been paid off and the EV would be a little over $200m assuming full warrant conversion. Let that sink in $100m Editda v $200m market cap. Bonkers. |
Great posts indeed - thank you guys!
Is there data on the current short positioning in this? |
Yes thank you guys |
Thankyou all for such detailed informative posts, really helpful. |
 I suppose it all depends on what the warrant holders do with the shares once they are exercised. I believe BoA is one of the holders, who have indicated that they see much higher value in them than at the current 15-16p level, in which case they just sit tight on them. Or (which I believe is currently happening) they are used to pay back the shorts that are in the market at the minute, so effectively the negative weight on the price is NOW, not THEN. (I.e. sell shares at 15-17pp currently, knowing you can 'buy' them back at 5.75p through warrants, bank the difference). So there 1) may not be 83m shares for sale (in fact I'm confident of this - it will be FAR lower than this), 2) they won't all be up for sale immediately and 3) the price action may / does already reflect this as it's public information. It's not ideal, but we get a chance to top up at 15p on a technical overhang which will last 1 MAYBE 2 years, whilst the company makes a lot of progress. I for one will sign up to that on a five year view every day of the week. And in fact we did, topping up in size in Sept at 16p.
Also remember that the warrants will raise around $6m - which MIGHT be going straight into paying off the debt - so it's not alllll bad.
Worth flagging that all the TPs (mostly around the 29p from memory) out there are fully diluted, so takes all the above into account already. |
Alex informed me that no new warrants have been exercised since 30th June, so the situation is still "53.4 million warrants potentially giving right to 83 million shares remain to be exercised up to June 30, 2025"
Excuse my ignorance but won't this lead to significantl downward pressure when they are exercised at some point over the next 6 months? |
BD, Valued insight, please keep us updated as and when you hear anything. |
HPCG, a very good and informative post. Just to add, I had a brief email exchange with CFO Alex yesterday who confirmed the following points: The warrants don't expire on refinancing - this was a point I particularly sought to clarify. Alex said that in "2023, we were having advanced discussions around refinancing with lenders that would have led to the warrants being returned to us. With the improvement in share price impacting valuation of warrants and with some other commercial considerations, we were not able to reach an agreement. The new deal doesn't cover the warrants". I had asked whether the refi announced in an RNS on 1st August this year would constitute a scenario where the warrants were no longer valid, but that's not the case. Additionally, Alex informed me that no new warrants have been exercised since 30th June, so the situation is still "53.4 million warrants potentially giving right to 83 million shares remain to be exercised up to June 30, 2025". This is as per RNS from 28th October this year. In terms of debt, from the 1st August RNS, the company has refinanced to bank debt which "will have a tenor of five years from the facility agreement date. 80% of the term loan will be amortized quarterly over 5 years with a 20% balloon" and that they "expect the transaction to close before December 31st, 2024." So, very soon hopefully on that! 2025 updated guidance should be issued this side of Xmas I believe. I would be surprised if there was 2026 guidance, just because the board would probably like the flexibility to decide next Summer what to do with the excess cash in terms of dividends / buybacks / reinvestment, so issuing 26 guidance might bind their hands somewhat on this. |
I see greenwood has just released a new note with a price target of 29p which is considerable upside.
I remain confident that GMS will blow is top sooner rather than later.
Just a matter of time.
Comfortable to hold as I suspect buyers will miss the boat if they don't buy soon.
P. |
Well there ought to be another short term 100% run because this should be trading at NAV given the returns this is making on NAV. These are the catalysts:
* Closing of the refinancing.
* Guidance on 2025 and possibly 2026
* FY 2024 trading update
* FY results
* share holder returns begin
These should be roughly in sequence. My understanding is the warrants expire with the refinancing but I guess until I see that happen I'm in some doubt. The refi is within the next few weeks.
In 2024 the trading update was 13 Jan. Guidance will probably be either on the refinancing or the trading update, rather than its own announcement.
In 2024 finals were 24 April. Once they are published the data in the likes of stockopedia gets updated and those historical accounting markers get reset. At the moment, for example, the current ratio looks very bad as the entire debt is short term as it all expires June 2025.
Buybacks (and or dividends) can start anytime after the warrants have expired as they are entitled to be pro-rata made whole by any return. Management has been saying come the second half of 2025.
So these are all in about the next 7 months, which I think is short order. |
Agree, no reason to sell this. Syria isnt an issue for GMS. Any buyer at 18+ needs faith and to think long term. The debt reduction and should really have an impact on the share price hopefully the long term debt ratio can stay low and look more attractive to future buyers. Have to think long term and not get caught up in wishing for another 100% short term run like we have seen in the past with this. Also think there could be some selling to free up funds for xmas? Thats what im hoping anyway lol. Again the day will come. Dont sell, INVESTEVERYTHING. |
No one knows why the share price is weak, only the sellers. If you look hard for a geopolitical reason you won't find one. If you look at the backlog you won't find a reason. If you look at financial data you won't find a reason. There is a rational reason for one seller, which is warrant owners. Buyers being put off need to have more faith in their own process. |
Any views on the current weakness? Possibly the action in Syria spooking PIs? GMS operates in the Persian Gulf so unless Iran and Saudi fall out I can’t see them being disrupted. Anyone have a more informed view on this? |
It will have its day. Bit of patience. I re bought today. It's cheap at this level I think |
Totally agree, never known a stock so consistently release positive after positive news and the downward trend continues.
Only logical explanation must be the outstanding warrants and possible conclusion of the seafox distributions.
Otherwise it's just illogical. |
What a frustrating stock this has become!
Every little heart-lifting rise gets knocked down again like playing Whack-a-mole.
Nevertheless, the fundamentals are good and seem to keep improving.
I'm guessing most on here have zero interest in technical analysis, but if the down-trend can finally grind to a halt about now and the stock grudgingly start to rise again, however slowly, there's a possibility of a higher low appearing on the chart.
That would be good and may signal the beginning of better price-action ahead. Lots of ifs though, so nobody should hold their breath! |
12th September:
Gulf Marine Services (GMS), a leading provider of self-propelled and self-elevating support vessels for the offshore energy sector, is pleased to announce the award of a new long-term contract for one of its vessels in the GCC. The contract spans a total of five years, inclusive of optional extensions, and contributes to further improvement in fleetwide average day rates. This contract takes our backlog to USD 464 million.
30th June 2024 (and 2023):
Secured backlog was US$ 426.8 million on 30 June 2024 (30 June 2023: US$ 301.4 million), which reflects the additional contract awards announced over the last 12 months, offset by the revenue recognised. |
>>Broker confirms there has been no downgrade at all. It was always 2.9c.>>
Apologies if I I've got that wrong - the numbers I quoted come from Stockopedia.
I looked them up this morning having read Paul Scott's comment that broker forecasts had reduced "quite a bit recently". |
Yes, I guesstimated the newly announced contract would total approx $23m. Given the 54 day drain on the backlog and the net -$2m off that backlog.
Over 18 months, that's around $15-16m per year - so not far off 10% of annual turnover - for one small-class vessel. (this assumes this contract is the only addition to the backlog since 10th October).
"Gulf Marine Services (GMS), a leading provider of self-propelled, self-elevating support vessels for the offshore energy sector, is pleased to announce the award of a new contract for one of its small-class vessels in the GCC region. The contract spans a total of 18 months, including optional extensions." |
zho3 Dec '24 - 09:17 - 2638 of 2645
He points out that broker forecasts have been cut back recently, which surprised me.
Stockopedia currently quote a consensus of 2.9c for 2024 (down from 3.8c on 3/8/24) and 4.0c for 2025 (down from 4.7c).
Broker confirms there has been no downgrade at all. It was always 2.9c. |
If they are turning over approx $14 million a month then between you would have expected the backlog to drop by nearly $28 million as the existing contracts are serviced.
Worrying about a $2 million drop in the backlog is worrying in itself.
The business is in great shape. |
There were 54 days between October 10th and December 3rd.
In those 54 days, the backlog, absent any new additions, would fall by the sum total of the contracted day rates x 54.
The new contract would add to that backlog.
Net effect is a drop of 2 million.
Contracts being lumpy, it's likely that the backlog rises and falls naturally. |
would it not just be this current contract is smaller than one that say has just been completed and so the backlog has gone down for that reason? Doesn't seem like an issue to me. |
I noticed that too (reduced backlog) and beginning to wonder who is releasing these rns and what for. |
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