Walking the talk
The recent trading update from Northbridge confirmed that the ‘talk’ of recovery has moved on to reality, with confirmation that the Group has returned to profitability. Significantly, the outlook for 2020 remains upbeat.Moving into profit and the related improvement in cash flow allows the Group to take advantage of a broader range of options for growth. Management relayed this to investors recently, underpinning our expectations of continued strong top-line growth and a move to meaningful profitability over 2020 and 2021, along with a realistic possibility of a return to the dividend list.
Trading during H2 saw a considerable improvement on the prior year and continuing the trends experienced during H1. With most revenues derived from rental activities, the business demonstrates significant operational gearing.
While there is a degree of resilience within the UK and European markets for Crestchic, its overseas markets are generally more cyclical or, in the case of the US where the Group is a relatively new entrant, at the early stages of growth for the division.
Trading within the Group’s oil & gas drilling equipment markets performed strongly, albeit growing from a low base, and significantly outperformed activity in the wider market. Figures from Baker Hughes suggest that rig count across the Asia Pacific region, where the division is most active, declined 2.2% y-o-y. By contrast, Tasman benefited from recovering natural gas and LNG markets within Australia.
With no change to estimates, we have retained our DCF-based fair value at 204p / share. While this suggests a relatively high forward PER of 22.3x, the return to positive EPS in 2020 and the likely rapid growth, thereafter, indicates that the forward PER for FY2021 will be more reasonable. That in turn provides scope for further momentum in the share price, particularly should EPS momentum improve faster than currently anticipated.
Halliburton assists its customers throughout the lifecycle of the reservoir, from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion and optimizing production throughout the life of the asset. The company's segments are: Completion and Production, which delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift and completion products and services; and Drilling and Evaluation, which provides field and reservoir modeling, drilling, evaluation and wellbore placement solutions that enable customers to model, measure, drill and optimize their well construction activities.
Northbridge Industrial Services is engaged in the sales and hire of industrial equipment on a global basis for use in applications in the oil and gas, shipping, construction, and power and utility sectors. Co. has two main reportable segments: Crestchic loadbanks and transformers, which is involved in the manufacture, hire and sale of loadbanks and transformers; and Tasman oil tools and loadcells, which is involved in the hire and sale of oil tools and loadcells.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.