Kentz Share Discussion Threads

[apad] 20/12/2013 16:23

How do you rate this comic jeff?
Say, cf IC.
I'm looking for something to subscribe to and am a bit fed up of easy journalese.
apad

[jeffian] 20/12/2013 16:06

Shares magazine's Oil Services sector report has now called this a sell, having written about the company glowingly last month. Funnily enough, they are still quite positive about the company in the report but suggest taking profits on risks on the oil price and integration of the Valerus acquisition. Regardless of that, I'm happy to hold on for the ride and, of course, the possibility of a bid has still not gone away.

[bones] 19/12/2013 20:45

From a Valerus viewpoint:



Valerus sells name and manufacturing operations to focus on contract business

Valerus, a Houston-based provider of natural gas handling equipment, operations and services, has decided to sell off a large portion of its business, which includes all of its manufacturing operations and close to half of its employees.

Pete Lane, Valerus' CEO, explained the company made the decision to sell its field solutions business to U.K.-based Kentz Corp. Ltd. (LSE: KENZ) for $435 million in cash so it could focus on the contract services side of its business.

Valerus has four core products and services: compression equipment and services; production equipment; process and treating services and equipment; and integrated services that include engineering, construction and operation. Lane described the company as providing everything needed to get natural gas from wellheads to a pipeline.

Before the sale, Lane explained the company had two business models for selling these products and sevices. In one business model, field solutions model, the company engineered, manufactured and delivered solutions to oil and gas production companies. In the other business model, contract services, it leased its equipment to other companies and provides contracted solutions to these companies.

Through the sale to Kentz, Valerus is letting go of its field solutions business model. With this, about 650 of its 1,400 employees will shift to Kentz, and all of its manufacturing and production equipment shops will be transferred to Kentz. The field solutions business will also keep the Valerus name while the contracted solutions business will soon choose another name to be announced in 2014.

"We believe this positions both companies for growth," Lane said. "We are focusing purely on driving contract services growth."

Lane, who will remain as CEO of the contract services entity, added that the company has a large, young fleet, including 1,500 compressors, to lease out and he sees a large opportunity for growth in the shale plays of North America and in Latin America.

When asked why an exploration and production company would want to lease equipment instead of own it, Lane said that it allows them to free up capital, and the company that is providing the equipment normally has expertise on how to run this equipment.

The new company that Lane will lead will remain based in Houston at Valerus' current headquarters, he said.

Kentz USA Inc. is also based in Houston.

© 2013 American City Business Journals.

[jeffian] 19/12/2013 11:00

Eh? Are you sure you're not confusing £/$ (KENZ reports in US $).

2012 dividend = 14.5c (8.84p) = 1.4%. Add 20% = 2013 divi around 10.6p = 1.7%.

[fizzypop] 19/12/2013 10:29

Well the interim divi was upped by 20% so forecast must now be 3% yield.

[mdara] 19/12/2013 09:26

Now wouldn't that be nice :). Though in fairness, it would seem that Kentz didn't overpay for the acquisition unlike so many companies.

[dvb99] 19/12/2013 09:17

Best use of "excess" cash would be a larger dividend payment

[rivaldo] 18/12/2013 22:19

From UK-Analyst's market round-up tonight:

"Canaccord Genuity has re-iterated its "buy" stance on construction group Kentz Corporation (KENZ), increasing its target price from 600p to 700p. The broker notes the recent announcement from Kentz which revealed that the company is set to acquire Valerus Field Services for $435 million (267 million pounds).

Cannacord feels that the acquisition has been completed at an attractive price and is a good use of the excess cash on the balance sheet."

[rivaldo] 18/12/2013 09:13

Canaccord have now raised their price target to 700p from 600p - and that's still lower than the other price targets here ranging up to 730p:



"Equities researchers at Canaccord Genuity hoisted their price target on shares of Kentz Co. Limited (LON:KENZ) from GBX 600 ($9.78) to GBX 700 ($11.41) in a research report issued on Tuesday, Analyst Ratings Net reports. The firm currently has a "buy" rating on the stock. Canaccord Genuity's target price points to a potential upside of 16.09% from the stock's previous close.

A number of other analysts have also recently weighed in on KENZ. Analysts at Liberum Capital downgraded shares of Kentz Co. Limited to a "hold" rating in a research note to investors on Wednesday, December 11th. They now have a GBX 712 ($11.61) price target on the stock, up previously from GBX 650 ($10.59). Separately, analysts at UBS AG raised their price target on shares of Kentz Co. Limited from GBX 600 ($9.78) to GBX 730 ($11.90) in a research note to investors on Tuesday, December 10th. They now have a "buy" rating on the stock."

[bones] 16/12/2013 15:31

Patience is the key indeed..

Chartists will be liking this pull back to 600p area, which is where the shares broke out from after the Valerus deal was made public. A retrace to previous resistance levels should help this area form a price support as the sellers at 600p in the past see an opportunity to climb back aboard at a good price having regretted the sale post breakout. Let's hope this plays out accordingly!

[rivaldo] 16/12/2013 14:07

Another positive article:



"Kentz – further reaction to proposed acquisition
By Steve Moore - Friday 13 December 2013

Shares in specialist engineering services provider Kentz (KENZ) have dropped back somewhat since initially surging at the start of the week on news of a proposed $435 million (£266.5 million) acquisition of the field solutions business of Valerus. The following updates on further reaction to the prospective deal.

A non-executive director of Kentz, David MacFarlane, reacted by doubling his shareholding in the company to 20,000 shares with the acquisition of £59,825 of shares at 598.25p each. Meanwhile brokerage Liberum Capital noted "Kentz appears to be paying 8.4x trailing EBITDA - which appears reasonable. Our initial reaction is that the acquisition looks consistent with Kentz strategy (if somewhat larger than expected) and should enhance growth prospects, particularly in the Americas".

Elsewhere, in an update entitled "Long awaited acquisition significantly earnings accretive", analysts at UBS noted "management has said the deal equates to 5.9x 2014E EV/EBITDA, implying it expects ~$74m of EBITDA in 2014 for Valerus... Factoring in new interest costs, we estimate it will add ~30% to consensus EPS". This conclusion tallies with brokerage Arden Partners having increased its 2014 earnings per share forecast for Kentz to $cents95.5 (currently circa 58.5p) from $cents75.

With Kentz shares at a current 612.5p, I continue to regard the prospective price/earnings multiple as still far from aggressive given the growth outlook (Arden forecasting just over $cents68 in earnings per share for 2013) and that the acquisition is not likely sufficient to deter the possibility of takeover interest in Kentz again as the climate for such activity improves. Either way, I continue to believe that patient investors in Kentz are likely to do well from here."

[bones] 13/12/2013 22:11

Topped up at 611p today. Felt I had to after topping up last week at 653p :P

Full basket of these now so waiting on the progress from here and hope the Americans don't have another of their hissy fits. The FTSE100 has no life of itrs own these days.

[felix99] 12/12/2013 14:54

speedsgh- Takeover code unless someone else makes an offer for them of course!

[lollipop4] 12/12/2013 13:13

Thanks speedsgh. Will the Valerus acquisition be a 'done deal' by then - if so, I presume any future take-over would have to be for the enlarged group.

I've held here for a couple of years, and am glad that the Kentz management team are finally getting the recognition from the market they deserve. Would prefer to see the Valerus acquisition go ahead.

[speedsgh] 12/12/2013 12:27

Amec + M&W Group are barred by the Takeover Code from making another offer for Kentz until 12/3/14 + 13/3/14 respectively.

[lollipop4] 12/12/2013 12:08

EGM for Valerus acquisition is 2nd Jan, so any follow-up offer from AMEC or M+W would presumably have to happen quite quickly? What effect would a follow-up offer have on the Valerus acquisition, if any?

[whizzy1] 12/12/2013 11:52

Rivaldo! Dare I say "how you doin mate?" Think we both got this (one of them) thread going about 5 years ago, I'm still in, topped up a dozen times over the years lol.

[whizzy1] 12/12/2013 11:52

Rivaldo! Dare I say "how you doin mate?" Think we both got this (one of them) thread going about 5 years ago, I'm still in, topped up a dozen times over the years lol.

[rivaldo] 12/12/2013 10:58

The IC today speculates on a follow-up bid for KENZ:



"Kentz bags Valerus FS

The share price of Kentz Corp (KENZ) recorded a double-digit surge on news that the oil services engineer is to expand its footprint in Latin America and the US shale gas market through a $435m (£265m) cash bid for Valerus Field Solutions - a company owned by private equity group, TPG Capital.

Kentz is to acquire the processing and production equipment, compression and integrated services business lines from Valerus, which posted revenues of $493m over the previous year, against Kentz Corp's $1.56bn.

IC VIEW:

The deal was well received by the market, although the scale of the acquisition surprised some analysts. The due diligence process was being undertaken at the same time Kentz was rejecting the overtures of AMEC (AMEC) and Germany's M+W Group, but the Valerus deal probably won't be enough in itself to dampen continued speculation over a follow-up offer. Hold at 638p."

[whizzy1] 12/12/2013 08:54

Just topped up 9k @608p

Selling poor performers, buying the good stuff on decent dips. Easy.

Feeling lucky to have got that many at this price, sold China Fund.

[hatter2] 12/12/2013 02:22

As a holder I am looking to top up but reckon opportunities at 570-580p will exist soon therefore no rush. I think the price did get a little ahead of itself but just my view.
Good very long term hold in my view; a core holding for a solid portfolio.

[ygor706] 11/12/2013 18:19

Didn't sell after the abortive acquisition noises made by Amec in August and have topped up today. The new acquisition appears to be for cash and the earnings of the new entity (net of borrowing costs) should drop straight through to the bottom line next year. Current weakness is unlikely to last imo.

[rivaldo] 11/12/2013 14:05

Perhaps because subsequently the share price rose more than he expected such that Liberum's clients didn't get time to fill their orders.