Higher utilisation levels and growing order books have combined to give this group confidence that 2023 will help to mitigate any external pressures, while seeing the group strengthen its prospects.
The £47m capitalised Gulf Marine Services (LON:GMS) is a world-leading provider of advanced self‐propelled self‐elevating support vessels (SESVs).
The group’s fleet of 13 vessels serves the oil, gas and renewable energy industries from its offices in the United Arab Emirates, Saudi Arabia and Qatar.
The SESVs are used 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 in offshore oil and gas platform installation and decommissioning and offshore wind turbine installation.
The group has given higher guidance for the current year to end December 2023 for its EBITDA to range between $75m to $83m – which is quite positive.
Executive Chairman Mansour Al Alami stated that:
“Our markets continue to show signs of strength. Vessel utilisation and day rates are continuing to remain resilient amid high demand for our vessels.
As we progress in to 2023, we aim to mitigate the impact of external pressures, including continued high inflation and higher worldwide interest rates, on our margins and maintain our focus on deleveraging and delivering on operational efficiencies.”
Analyst Opinion – Target Price of 20p a share
Daniel Slater at Arden Partners has a Buy rating out on the group’s shares, with a Target Price of 20p, over four times the current market price of just 4.6p.
His estimates for the year to end December 2022 are for sales of $128.1m ($115.1m) while adjusted pre-tax profits could rise to $25.2m ($20.7m), giving earnings of 1.9c (2.7c) per share.
After this Trading Statement the group has given guidance from which Slater assesses $139.9m sales in the current year, lifting profits up to $29.1m and generating 2.2c in earnings per share.
Conclusion – these shares could easily double
With an order backlog of $369m the demand for the group’s vessels has continued, while improvements in operating efficiencies and strengthening markets will certainly boost the bottom line.
The group’s shares were up to almost 8.7p each ten months ago, they could so easily return to trade at those levels.
Currently trading at only 4.6p each, these shares have the ability to more than double in the next year.