Gulf Marine Services Share Discussion Threads

[hpcg] 29/9/2022 08:59

I interpreted 72 months as 2*36. A 6 year contract on a vessel of any type would be highly unusual.

[catsick] 29/9/2022 08:57

A contract for two vessels with a total duration of 72 months, sounds to me like a single 6 year contract covering 2 vessels

[gen_romer] 29/9/2022 08:40

guessing these are separate 3 year contract for 2 vessles and not 6year contracts for each. They had said that contracts signed in first half of the year are at 32% higher day rates, so should be worth $70m of backlog just today.

[blusteradjuster] 29/9/2022 08:02

Without any further numbers, it’s hard to tell just how good that 72-month contract is.

In cricket, it’s wise to have a batter ‘stick around’ at one end while other batters slog away at the other - especially when you’ve a big total to chase.

[hpcg] 29/9/2022 07:45

In a strong day rate environment it is critical not to undersell capacity. Contractors also need to play hardball with mobilisation and demobilisation fees, payment for downtime, weather etc. Large backlogs in time are bad, though large in money is good.

[catsick] 29/9/2022 07:16

New 6 year contract at improving rates over 15% of the fleet , thats another 125m plus onto the backlog

[blusteradjuster] 29/9/2022 07:10

It’s almost as if the BoD are trolling this thread.

[catsick] 27/9/2022 10:36

Its a very simple company, they own 650m ish of assets which at current day rates they get a net yield after all costs of about 12% , they are about 50% leveraged at libor +3 so in all circumstances they have 3-4 times interest cover , as they don't pay dividends at the moment debt goes down very fast , even if day rates don't rise they have a clear path to pay all the debt down, if the day rates keep slowly rising then its happy days and we trade back above 25p nav

[hpcg] 27/9/2022 10:04

owenski - this is an asset heavy company. Everyone in the wider shipping sector operates with large debt, it's basically impossible not too. No one is making self propelled accommodation barges at the moment, and if they choose to they will be way more expensive than the current fleets. Nor are rates strong enough to create demand for new builds, and nor are the long term oil and gas prospects strong enough. They are used for offshore wind projects too so there is long term demand as the fleets age out. This is the joy of inflationary environments for those with existing assets.

[trident5] 27/9/2022 09:27

It's an E class vessel - they have 4 such in their fleet and they are the largest and most expensive to hire.

Assuming, very conservatively they're hiring it at $28k a day then it would be worth heading towards $20m over the 22 month contract.

Yesterday's results and narrative are probably the reason for the muted reaction - their backlog was very low - so orders need to come in.

[fuji99] 27/9/2022 09:19

The market is right for not reacting to this supposedly "contract". How much is it worth ? £1 or £1 million ? If it's peanuts, it's nothing really. Don't be fooled.

[owenski] 27/9/2022 09:15

Just goes to show I'm good at picking out poor or overpriced investments, that would be the - 'bit of a theme'.

Are you saying BMN is a good investment or that ITM isn't overpriced or that GMS's debt pile relative to actual earnings is not a problem?

[owenski] 27/9/2022 08:10

That dept compared to their earnings is horrendous and makes this uninvestable.

Recent results weren't that impressive.

Bargepole

[babbler] 27/9/2022 08:03

Nice contract. They do love to surprise.

[trident5] 26/9/2022 10:43

I don't agree - those assets only get converted to cash in a fire sale and they won't fetch anything near book value. This is a net liability and I suspect day rates can't get back to 2017 rates because competitors have picked up vessels cheaply when oil was lower.

The debt here is a huge problem until they get significant improvements in day rates and that has yet to feed through despite oil prices picking up. Their forward sales are also down, and hopefully that's for the reason given above - they're waiting better rates; but there's a lot on trust here now.

[hpcg] 26/9/2022 10:02

trident - I get what you are saying there, but the assets are worth more than the debt and currently equity is just a stub, so it genuinely is a dollar asset.

[trident5] 26/9/2022 09:43

It's really a USD liability.

[catsick] 26/9/2022 09:30

Ive bought another 500k in a few clips, huge incorrect reaction and good to get rid of the horrible pounds into usd assets ....

[richtea2517] 26/9/2022 09:27

Agree. Over reaction.

[catsick] 26/9/2022 09:07

The warrants to be issued would be for 132m shares at 6p a share so above where the shares are now and 11.5% of the company, a no brainer compared to 50m usd of equity which would be at a big discount... makes no sense, the shares are on a pe of about 2 and in 12 months time even lower

[blusteradjuster] 26/9/2022 08:54

13% more shares post theoretical warrant-exercise.

If that is all the bear-case is built on, well, it’s built on sand..

[hpcg] 26/9/2022 08:53

Yes - I'm not sure about the reaction either. I'm very happy to see the backlog lower, which I guess may be worrying some? In a rising rate and inflationary environment one wants to see a short duration backlog - the very worst thing is a long backlog. I remember a former colleague of mine moving to another company into a sales and contract position covering Asia and he very soon sold all his vessel time for 3 years forward. This was coming off a cyclical decline and he found it so easy to sell because he had locked in low rates.

Aside from that it all looks as expected, guidance maintained, leverage ratio declining and to get below 4, interest expense declining, complete headroom for working capital and performance bond requirements (50% of facilities used for 87% utilisation), more certainty on the warrant issue vs capital raise, which are a wash with respect to dilution.

I'm not sure why people selling today weren't selling last week if it is a general market thing.

[catsick] 26/9/2022 08:51

Yes but the warrants are over not wthat much of the company and struck higher than the current price, so better issue warrants than a massive dilution at current prices, after today's mover they will 100% issue the warrants

[loglorry1] 26/9/2022 08:50

Apparently they are looking to lock in longer term contracts which has led to the secued pipeline looking a bit soft. Let's hope that's the case.