Gulf Marine Services (LON:GMS) – shares should double in price!

09.04.2025

This group, which is a leading provider of self‐propelled, self‐elevating support vessels to the offshore energy industry, this morning reported its full-year financial results for the year to end-December 2024.

On top of the group’s owned fleet of 13 vessels in the Middle East and Europe, it is also currently operating an additional leased vessel in the Middle East.

This morning’s results showed a 10% increase in revenues to $167.5m ($151.6m).

Over the last year and so, the group secured 7 new contracts and extended 5 existing ones, totalling 23.8 years in aggregate.  

This is an improvement over 2023 where 4 new contracts and extended 4 existing ones, totalling 8.4 years in aggregate.

It also secured a new contract for an additional vessel in Europe, further strengthening its presence in the offshore wind sector.

As a result of these contract wins and extensions, the group achieved a backlog of $570m on 01st April this year.

That backlog sets the path towards generating future value for the shareholders.

Its focus continues to be on further reducing the debt as well as providing a balanced capital allocation, maximising business opportunities, and growing shareholder value.

As far as the group’s outlook is concerned this morning it has stated that:

“While offshore services sector continues a positive trajectory, and adaptability to potential future cycle changes remains essential.

With a strong focus on operational excellence and safety, we aim to be well-positioned to navigate cyclical shifts and seize future opportunities.

Our priority is to strengthen resilience and agility by improving our balance sheet and fulfilling our commitment to delivering long-term value to shareholders.

With 96% secured utilisation and improved day rates for 2025, we look forward to another year of strong financial performance with our adjusted EBITDA guidance for 2025 of between $100.0m and $108.0m.”

At Zeus Capital, analyst Daniel Slater has a 30p a share valuation out on the group’s shares, he stated that the results showed another year of strong cash flows and net debt reduction.

He expects that theme to continue going forward through 2025, with the significant order book continuing to support revenues and cash flow, driving further deleveraging and creating the opportunity for growth via more leased vessels, and for potential shareholder returns.

For this year to end-December 2025, he has estimates for sales of $184.3m ($167.4m), with adjusted pre-tax profits increased to $56.7m ($40.9m), with earnings of 4.4c (3.4c) per share.

Over at Panmure Liberum, in reiterating their Buy recommendation for the group, its analysts Andy Smith and Ashley Kelty, have today increased their Target Price for GMS shares from 30p to 32p each.

They have estimates out for the current year to end-December to see $177.0m sales, with $52.8m profits, 4c per share in earnings and paying in sterling a dividend of 0.85p per share.

For 2026 they see $185m sales, $64.4m profits and $0.05 in earnings, with a 0.90p per share dividend.

I really like the business model of this group and consider that its shares, at 15.66p, are below half their real market value.

(Profile 30.11.23 @ 13p set a Target Price of 16p*)

(Profile 22.01.24 @ 15.95p set a Target Price of 19.50p*)