As I said in post 2423 just a week ago the Endeavour is already engaged in windfarms. It has been around the coast of Northern Europe installing for years. There are more specialist rigs on the market now for installing the monopile but it will be useful for years with its heavy lift crane dealing with blade installation and replacement. |
Looks like they're already there. Gulf Marine Services, a leading provider of self-propelled and self-elevating support vessels for the offshore oil, gas and renewables sectors |
catsick - right, I very much agree with what you wrote. I wasn't aware there were cold stacked straight out the dockyard platforms. Yes anything that can be purchased at a good prospective yield makes sense. Mobilisation of those units will be expensive though. |
There won't be any new builds, current prices are way below replacement value, I guess they might be interested to pick up cheap assets that are for sale, eg there are some vessels that have been built but the buyers were unable to buy that have been sat unused for years in the shipyard, these will be available to buy at deep discount, nobody is going to place a new order for a rig of this type probably ever again given there is no point buying a 40 year life asset in an industry people think will be gone in 20, this is a kind of a moat, if they want to expand the fleet it will be from the existing universe of vessels, given they yield 20% at the moment it makes sense given the debt is now under control, although buybacks would probably be better |
If any return to shareholders before the exercise of the warrants they should be made as dividends. Warrant holders do not participate in dividends but they do get the benefit of buy backs. The latest dates for the warrants to have been exercised is 30 June 2025. After that date, and whether or not any warrants are issued, then part of the mix should be share buybacks mechanically applied versus NAV - a full program below NAV, a partial program up to 10% above NAV and nothing at 20% above NAV or similar. |
Enterprise value is currently approx GBP400m.
5.1 - 5.6 x forecast 2024 adjusted EBITDA.
While that ratio is below 8, I'd prefer buyback to dividends.
"GMS Board has also approved a dividend policy dedicating 20%-30% of annual adjusted net profit towards distributions to shareholders in the forms of dividends and potentially share buyback provided all bank covenants are met and other plans permit." |
 Panmure Liberum
New US$300m banking arrangements and a dividend policy
GMS has announced revised US$300m banking arrangements with three banks resulting in reduced interest rates of 250bp +EIBOR, (down from 300bp +SOFR) which will fall to 225bp +EIBOR when the net leverage falls to 2x. The facility also removes ‘most’ restrictions on dividends and share buybacks with GMS confirming it will pay 20%-30% of annual Adj. net profit to shareholders. We have assumed it will pay a dividend on the full year results of 2025 of 0.9p, implying a dividend yield of over 5%. We re-iterate our BUY recommendation and target price of 28p as the favourable macro-outlook and improved visibility sees GMS heading into 2H 2024 and beyond in its strongest position for years.
...
The target price is based on the ‘net realisable value’ which we have defined as the net book value of the fleet less net debt, divided by the fully diluted number of shares. Using our assumptions for the net book value of the fleet at December 2024 which benefited from an impairment reversal of US$33m in 2023 (another indicator of the improved outlook for the sector) and our estimate of net debt at December 2024, it implies a value of 28p representing upside of c70%. As a sense check to justify the new target price, the resulting price-to-book ratio would still be only 1.0x illustrating that GMS still offers significant upside. |
I'm happy with investment if it is from existing fleets. I am very cautious on new builds. |
My financial models predict (prudently, I believe) average debt in 2025 of $200m with total finance cost of 7,5% giving interest expense of $15m v´s some $30m in 2023. That`s around 1,5c per share reduction, and ongoing.
Personally I would prefer that they invest in revenue growth than pay dividents. Current utilization can`t be significantly improved and we cant expect prices to rise indefinitely. |
Spot EIBOR today is 5.034%
Spot SOFR, yesterday 5.33%
I don't know if the debts are priced off spot, 3 month or 1 year, but the curves are similar. There will be a cost to hedging, and in as much as there will be some costs in the local currency I don't think they should hedge it all.
The September rate cut will knock 25bp off the debt payments prior to the transaction closing. |
"The loan will have a tenor of five years". Sing it loud! |
Today they state:
"As we have made an early settlement towards our debt last week, our current net debt is USD 234 million, down from USD 267.3 million as of December 31st, 2023.
On 13th May they stated:
"The Company is also pleased to report that it made an additional prepayment of USD 5.0 million towards its debt repayments in the last week, reducing net debt to USD 250.4 million."
A reported 16.4m reduction in 80 days. |
The RNS I know a lot of shareholders have been waiting on. Good news. Debt being reduced at a rate of $6 million a month so by year end it will be approx $205 million and under 2x Editda in Feb/ March 2025.
Hope they don't buy any more vessels and concentrate on shareholder returns instead. |
Another fantastic RNS... :) |
@rivetest Absolutely.Cadeler/seajacks is doing very well from ofshore wind instalations-they got handful of larger newbuilds joining the fleet during next few years+super bullish guidance
GMS ability to get bank debt for vessel repurposing (if that is needed) appears low at this point (hey where is that debt refi they have been talking about?).At same time middle east O&G driller Ades last week secured an insane $3b fresh debt for growth & acquisitions! |
Low volumes. |
They don't need to be re-purposed, hence why the Endeavour is off Lancashire doing just that. It's great to have that as purpose going way into the future. The greater shipping industry has a history of massive over expansion in every single sector. In some cases, like multiple sub-sectors within the oil complex, some vessels ordered at the peak of the oil bubble in 2006 hardly saw revenue service. Because they are long lived assets they hang around depressing rates for years, and all owners go bankrupt or close to eventually. So it is always a risk, but at the moment not one that is apparent.
Summer doldrums here and in other shares. I have no idea who is hitting the bid in this period of reduced liquidity. Broker forecasts for this year and next have been gradually creeping up. |
No risk of overcapacity if the self propelled jack-ups are repurposed for building windfarms. |
Looks like Paul Scott is sponsoring, if that is the correct word, GMS. Mark Simpson (Small Cap Value Report) has not historically been a fan seeing the self-propelled jack-ups as wasting assets with a 20 years life. The evidence though is that oil services assets have a much longer life than that, in this case probably as long as HC are produced in the Persian Gulf. A well maintained rig with sacrificial anodes has an almost infinite life so far as the super structure is concerned, especially in the benign conditions of the Gulf. There is no super efficiency gain in newer units. Indeed with inflation the cost of new unit would make it extremely uncompetitive with existing fleets. The danger ever is over capacity. |
Join us for a jam-packed MelloMonday tonight from 5:00pm with Stockopedia favourites Paul Scott and Mark Simpson both joining us on the BASH when GMS will be one of the companies analysed. The programme for the evening is as follows:
5:00pm Interview with Investor and Ex-Schroders Fund Manager, Iain Staples
5:30pm Company presentation from TEAM plc
6:00pm Company presentation from Velocity Composites
6:30pm Trading update from Time Finance
6:45pm Educational Presentation
7:00pm Company presentation from Coral Products
7:40pm BASH (Buy, Avoid, Sell, Hold) Panel featuring Iain Staples, Paul Scott (GMS) and Mark Simpson (CAU)
For more information, click here:
There are lots of interesting sessions and all annual pass holders and individual ticket holders will be sent a recording of the show within 48 hours of registering. For half price tickets, use code MMSTOCKO50. |
I wonder why seafox had to time it now to make things worse....almost as if on purpose.This overhang is here to stay for atleast a year in my view.NAV doesn't matter in this case |
Reckon it's warrant selling.
£180m market cap, $190 million debt. Editda with rising rates and falling interest payments of nearly $100 million pa.
If they hit their targets in 5 months the NAV will be 25p - share price 16p.
Crazy cheap. |
Tree shake I reckon |
Register for streaming realtime charts, analysis tools, and prices.
Hot Features
Premium
