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  • Writer's pictureMark Watson-Mitchell

Gulf Marine Services – contract extensions could help shares to rise 50% and still look undervalued

Following news earlier this week of two important contract wins analyst Daniel Slater at Zeus Capital is rating the shares of Gulf Marine Services (LON:GMS) as a Buy, expecting its shares to treble in value.

The Business

The group is a world-leading provider of advanced self-propelled self-elevating support vessels.

Its fleet of 13 SESV’s serves the oil, gas and renewable energy industries from its offices in the United Arab Emirates, Saudi Arabia and Qatar.

GMS's clients in a broad range of offshore oil and gas platform refurbishment and maintenance activities, well intervention work and offshore wind turbine maintenance work, as well as offshore oil and gas platform installation and decommissioning and offshore wind turbine installation.

The group's assets serve clients' requirements across the globe, including those in the Middle East, South-East Asia, West Africa, North America, the Gulf of Mexico and Europe.

Broker’s Opinion

Slater is estimating that the current year to December will see revenues lift from $133.2m to $146.7m, with adjusted pre-tax profits rising from $19.5m to $26.7m, raising its earnings to 1.9c (1.7c) per share.

For the coming year he sees $153.9m sales, $40.6m profits and 3.1c earnings.

He has a value of 20p on the shares, while the group’s NAV is 22.6p per share.

Conclusion – shares are capable of rising another 50% and still looking cheap

Since we last commented on this group in mid-January the company’s shares have risen almost 48% to 6.9p.

On the basis of the group extending various of its existing contracts and the potential to win even more, this company’s shares could so easily rise another 50% to 9p each and even then look cheap going forward.


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