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Writer's pictureMark Watson-Mitchell

Gulf Marine Services – broker reiterates Buy despite a €4m hit

The Abu Dhabi-based leading provider of advanced self-propelled, self-elevating support vessels serving the offshore oil, gas and renewable industries could be taking a €4m hit to its 2022 results.


The group told shareholders that one of its clients in Europe, World Marine Offshore, has filed for bankruptcy.


Currently owed €4m on contract due to end shortly


The GMS contract with WMO, which is due to complete in Q1 2023, is to support the construction and development of a major offshore wind farm in France.


The group is currently owed about €4m but does not yet know how much of this outstanding figure may be recovered, talks with the bankruptcy trustee will ensue.


Continued strong guidance for this year


Although GMS looks to suffer somewhat, the group confidently reconfirmed to the market that its EBITDA guidance for the current year is for between $75m to $83m.


Analyst Opinion – looking for 20p a share


Analyst Daniel Slater, at the group’s corporate broker Arden Capital, considers that any negative for GMS is likely to be relatively limited overall, with the vessel concerned in the contract being easily deployed elsewhere if the contract does end early.


His estimates for the year to end December 2022 are for sales of $128.1m ($115.1m), adjusted pre-tax profits of $25.2m ($20.7m), with earnings of 1.9c (2.7c) per share.


For the year now underway his figures suggest $139.9m revenues, $29.1m profits and 2.2c per share in earnings.


The broker has a Target Price of 20p against the current market price of 4.67p, after having eased 0.385p on the news.


Conclusion – take a quick advantage


Take advantage of this quick price fall and then hold firmly as the contracts increase this year.

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