Could be that some of the beneficiaries took fright at the decline from the Springtime peak such that they're rushing for the exit.
If Seafox are below 45 million shares after this latest distribution, the implied and actual (before and after any subsequent in specie dividend(s)) overhang is much diminished. |
Assuming it's a simple 9.69% - 5.4% then the latest in specie dividend would take Seafox down to 4.29%.
September 4th:
(i) distribute 150 million of the shares that it owns in the Company pro-rata in the form of an in specie dividend to Seafox's shareholders, which include prominent family offices, such distribution to take place on or after the 15th of September 2024; and
(ii) retain (directly and through its subsidiaries) the remaining 103,686,385 shares in GMS (representing a 9.69% equity interest in the Company). Whilst acknowledging that circumstances can change, Seafox has confirmed that it has no current intention to make further disposals in the short-term, given the positive outlook for the Company. |
My experience is these overhangs can drag on for months or even years, so don't see the need to get involved until it's cleared. Of course always the possibility that GMS is taken out at a big premium to current share price and better to stay invested. On balance though I think better to wait on the sidelines. |
Yeah this overhang is going to take a while to clear:
"Following the announcement on 4 September 2024, the Company has been notified by Seafox International Limited ('Seafox') that it intends to distribute a further 58.8 million GMS shares (representing 5.4% of the Company's issued share capital) pro-rata to the shareholders in Seafox in the form of an in specie dividend, and that the distributions will take place on or after the 18th December 2024"
All imo
DYOR |
Master Investor's Mark Watson-Williams has just sent out an email covering GMS, most of which is behind a paywall - here's the intro:
"Gulf Marine Services (LON:GMS) – Shares are significantly undervalued
Chairman Mansour Al Alami stated that:
"Strong demand for our vessels continues to drive solid results.
Both forecasted utilisation rates and contracted daily charter rates will enable us to achieve the above guidance."
Yesterday the UAE-based provider of self-propelled, self-elevating support vessels for the offshore energy sector, Gulf Marine Systems, upped its guidance to the market for 2024 and 2025.
It stated that the company now anticipates its 2024 adjusted EBITDA guidance to be at the upper end of previous guidance of $98-100m for 2024.
For 2025, it expects its adjusted EBITDA to reach $100-108m, an increase from the previously forecasted 2025 EBITDA guidance of $92-100m..." |
Was really referring to the o & g sector generally. |
GMS seems to be defying the fortunes of others in the sector.
Which direct competitors? |
What worries me is if this is how the market reacts when things are good, how will it react when things take a downturn, because given the cyclical nature of the business, GMS seems to be defying the fortunes of others in the sector (operational fortunes not share price fortunes that is) |
Gulf Marine Services - Director/PDMR Shareholding #GMS https://www.voxmarkets.co.uk/rns/announcement/5bd0ec05-f28d-4697-9f8e-786ba3b66a44 #voxmarkets undefined |
Potential investors looking back can see they are buying essentially at last years prices. Those that might feel they missed the self propelled accommodation jackup can see they have not lost out at all but have saved almost a year of dead money. |
I always wonder whether these "commenters" move the needle? I may be wrong but gut feeling is he isn't exactly putting in 6-7 figures so it might be overstated somewhat these type of people's influence? That being said, I'm biased as an institutional background AND anyone talking about it in a good light is an positive thing |
Yes agreed and I am adding here.
I am sure Paul Scott will be covering these. He is a big fan at 15p |
All very reasonable points. And whilst the share price reaction has been a little muted, a good volume has gone through already today. Hopefully that means that even if this good news doesn't translate into a short term bounce, in the long run clearing out the overhang is still a big positive from this recent run of good news |
 its flows / supply demand for the share. Fortunately the company will be able to fix that itself come Q3.
Tangentially I think theree might be a few burning fingers in a similar space that could mean money leaving oil services in the very broadest sense. Very much on my watch list are the tankers, specifically products, but also crude carriers. Scorpio (STNG) has almost halved off its highs, back to where it was in July 23, International Seaways (INSW) which carries products and crude is similar, DHT, much flatter and more range bound as it was never as leveraged.
These are not the same, ahem boat, by any means. Rates have declined and so have profit forecasts (not so for GMS) and a few months ago brokers were all strong sellers (not so for GMS), though they have rebounded recently to buys or strong buys. The sector runs modest gearing now, and pays out large covered dividends. They are all on my watch list and I'm just waiting just waiting for a break in momentum and for forecasts to stabilise. |
Bought in here this morning for the first time after the shares dipped. Looks like the overhang is lifting now?
Panmure Liberum have reiterated their Buy and 30p target price.
They summarise:
"Upgraded guidance for 2024 & 2025
GMS has issued revised Adj. EBITDA guidance for 2024 with it trading at the upper end of the previous guidance range of US$98m-100m and has increased its guidance for 2025 from US$92m-100m to US$100m–108m. Against this background the shares have declined 13% over the last month, yet 1) the last disclosed backlog stands at a record level of US$503m (in February it was US$373m), 2) deleveraging has accelerated in 2024, 3) new banking facilities enable options to expand the fleet and engage in share buybacks, 4) GMS has raised the potential of paying a dividend, and 5) new opportunities have emerged in European waters for Offshore Wind Farm maintenance. We re-iterate our BUY recommendation and target price of 30p.
GMS continues to deliver
The company continues to perform well with revenue growth boosted by higher day rates. The significant reduction in net debt has materially reduced borrowing costs (US$31m in 2023 falling to an expected US$13m in 2026) and the recent re-finance gives the company scope to look at ways to expand the fleet (i.e. leasing). Demand for SESVs continues to be strong as evidenced by the rise in the company backlog which represents c3x FY25E revenues and indicates that the company’s financial performance looks secure in the coming years.
Vessel demand remains strong
Oil & Gas activity levels in the core MENA region remain high (GMS has no exposure to the UK economy), despite crude prices faltering as demand concerns continue to weigh on markets. We see the recent postponement of OPEC+ production increases having no negative impact on GMS given the high level of backlog with their vessels being utilised for (already) committed work programmes. In the event that OPEC+ does increase production, we see this as a positive with the increased activity driving demand higher." |
Muted reaction.
Could almost go negative on a forecast beat.
So this looks like the Seafox overhang continuing to play out in the market. You wouldn't expect this type of reaction when the price has already trended down like that.
Are we waiting for some whoppers to hit?
Show us the whoppers.
On the watchlist it goes.
All imo
DYOR |
They should rename themselves Tesla Marine Services and wax airily about their plans for a fleet of AI-enabled roboships.
It’s the only way to attract investor interest currently. |
Been in touch. Still expected by YE. |
I wonder if the lack of refinancing update is worrying the market. They said it would be wrapped up by year end but there hasn’t been confirmation. |
Beers, makes you wonder why it is ! |
Yep, looks like another $75-80 million free cash available, to reduce the debt or for other means, is baked into 2025.
That’s around 20% of the enterprise value - ridiculous. |
https://www.investegate.co.uk/announcement/rns/gulf-marine-services--gms/update-to-2024-and-2025-ebitda-guidance/8614890 |
It just cannot stay down here for much longer |
You are, for the most part, conversing with people here 2 years before Paul Scott mentioned it. The figures released by the company tell their own story. I am very surprised at the share price today, but I don't control any others in the market. I've been buying more on occasion in this period, though without increasing the proportion of my portfolio allocation. The influence of commentators here and elsewhere in the PI sphere is significantly overstated and diminishing all the time as the active investor base shrinks. Not only that but PS writes on Stockopedia, a product founded on the basis of factor investing. People that work off of tips have at best 5 figure portfolios and are utterly insignificant outside of micro cap stocks.
Specifically on the subject of factors, even the interims are well out of date, with net debt having decreased from $238.5mn end H1 to $221mn end Q3 with similar to come this Q. Come the FY report those numbers will be clean(er) with just the distortion from the fair value adjustment of warrants, assuming no more are converted this year distracting from the trading numbers. Probably, as that depends on where the share price ends up on the last trading day of the year.
Fed is likely to cut next week, but perhaps not at all in 2025. That's a modest cut to the interest bill in addtion to the lower interest rates on refinancing. Dollar is strong and as I have a sterling basis that adds to the attraction. |
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