Gulf Marine Services

6th Jul '15 by WarrantStar

22 comments 17875 reads

Well up today on this RNS.

Gulf Marine Services (LSE: GMS), the leading provider of advanced self-propelled self-elevating support vessels (SESVs) serving the offshore oil, gas and renewable energy sectors, is pleased to announce that one of its Large Class vessels in Europe has been contracted for decommissioning work, a new activity for the Group.

I believe this company is greatly under valued. Just look at the Graham Formula margin of safety!

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About the Author

WarrantStar

Premium Member

I am a keen & experienced investor. I love my spread sheets, and like to think that I know what I am doing. I wouldn't be offended to be described as a bit geeky. Mostly I do well, but I always strive to do better. Married male. Born 1957 England. Good career in industry for 35 years. Been successfully investing for about 30 years. I chose to retire from salaried employment at age 57 to look after my investments. I consider myself to be quite analytical / logical / mathematical, but also take into account how the world is likely to change & how people behave. I always follow my processes before taking action. more »

22 comments

Rusty2

6th Jul '15

The Naked Trader has bought GMS a few times this year, not sure if he still has them as his target was around 128p.

andrewewe

6th Jul '15

How much exposure do they have to offshore wind farms?

Rusty2

6th Jul '15

They do have some, why?

WarrantStar

6th Jul '15

It's rather disappointing to see it finished down on the day after such a good news announcement. I suppose that it just highlights the difference between reality & perception. Sooner or later the fundamentals will cause some decent momentum to develop.

janebolacha

7th Jul '15

The price of crude dropped 8% yesterday in the US. Most oil services stocks were badly hit.

andrewewe

7th Jul '15

I think the renewable energy exposure is good, as it helps the company to diversify away from its exposure to oil price volatility.

roque22x

10th Jul '15

The company has the potential of a very positive upturn. It is extremely undervalued with a PE of around 6. I believe this is because it is involved with oil but if you look closely most of its maintenance activity is not affected by oil price and getting into decommissioning is a smart move in the current climate. It's rising profits are testament to a sound business model.

loudenr

13th Jul '15

GMS also has a lot of debt. My gut feel is that if it can make steady progress in reducing this the share price should increase. Personally given the dividend yield is not great I would be happy to forego it in order to get the debt paid off sooner

imranawan

21st Mar '16

Gulf Marine Services (LON:GMS) issues a TU this afternoon in advance of the publication of the full year results tomorrow morning: http://www.investegate.co.uk/gulf-marine-services--gms-/rns/trading-update/201603211504217899S/

Looks like EPS is likely to be down by 25-30% for 2016 - not unexpected, but looks like its already in the price.

Does anyone here still hold?

Imran.

bsharman

21st Mar '16

I didn't see that Imran - thanks for sharing.

andrewdb

24th Apr '16

This has been on my watchlist since May '15

I see that many like this company but... a little bit of googling says

http://www.investopedia.com/articles/active-trading/051215/cost-shale-oil-versus-conventional-oil.asp
shale oil is viable at $40-60 per barrel

http://www.forbes.com/sites/christopherhelman/2014/12/02/bad-timing-chevron-christens-new-8b-deepwater-oil-platform/#5444e4425909
deep water oil is viable at $65-$75 per barrel

The point here being that the company may well be in a nice little niche and run by excellent people, but until the price of oil looks like it will be > $60 pb, the market Gulf Marine Services (LON:GMS) is in will remain rather constrained, and so will any profits.
So imo, there is no need to buy now and not likely for some time.

On the other hand, a prospective PER of 3.36 @22/04/16 is rather tempting and if they can just keep profits at around 68m, surely there will be a re-rating.
- so bottom fishing is in order

On the third hand they have assets which are industrial oil support things on the balance sheet at 802.8m and long term liabilities of 459.7m and we can all guess those assets are worth a lot less than 802.8 in the current market.
- so I should stand well back

On the 4th hand a p/bv of 0.6 says any write-down is already priced in.

From the results RNS 22 March 2016
"Expected peak net debt level in 2016 of approximately US$ 435.0 million before reducing to around US$ 425.0 million by year end."
This gives me reason to think they have debt repayments under control if nothing else goes wrong.

But in '15 depreciation was 134-112.2 = 21.8 m USD, and should be a lot more in 16/17.
But I suppose that if they can rent the platform out, (and it looks like they can) what the book value is is less material.

So I am torn.

gus 1065

27th May '16

Seems to be some interest in Gulf Marine Services (LON:GMS) as the share price is up more than 20% so far this week with another 10% today. No obvious news driving it other than general improvement in the price of oil. I wonder if it's just a change in sentiment or if there is something going on behind the scenes.

Gus.

Carey Blunt

27th May '16

Motley Fool reviewed them yesterday after market close. Not a buy rec but the commentary was generally positive and so may have moved the price.

WarrantStar

29th May '16

I sold my shares in Gulf Marine Services (LON:GMS) long since. I think that the mistake that I made with this was that I believed the assertions that the company made that their fortunes are not dependant on the oil price. These assertions may or may not be true. But the fact is that the market generally believes that their fortunes DO depend on the oil price.
Also loads of debt doesn't help.

bsharman

30th May '16

Hi Gus,

Have you seen this article: http://www.whatinvestment.co.uk/financial-news/funds/2525356/gervais-williams-the-three-uk-smaller-companies-that-have-been-made-bargains-by-the-recent-market-turmoil.thtml
However in the article Gulf Marine Services are called Global Marine Services.....

gus 1065

30th May '16

Thanks for the link. I hadn't seen the article. Not the greatest piece of financial journalism ever written but a good endorsement to have and the timing of the article (May 26th) seems to tie in with the pick up in the Gulf Marine Services (LON:GMS) share price.

Best,

Gus.

Gary Farquhar

23rd Jul '16

Gulf Marine Services now appears to be priced to fail, following the latest market update concerning contract cancellations and remaining headroom against lending covenants.

However, oil production protection activities (OPEX) and decommissioning activities (ABEX) are still required to some extent, regardless of oil price, just to ensuring producing assets continue to flow and retired assets can be decommissioned cheaply, when supply chain costs are at their lowest levels.

I have therefore started to build a position in GMS on an educated guess basis that they will secure enough OPEX/ABEX related work to survive the oil price downturn and come out the other side with a fleet of newish vessels, superior to competitors (of which there may also be less) and therefore be in a prime position to capitalise on the next upward turn of oil price cycle.

GMS could also be a potential bid candidate at these prices??

Downside risk - I'm being too optimistic, GMS lose more contracts, go bust and I lose my money!

gus 1065

4th Jan '17

Early days, but perhaps Gulf Marine Services (LON:GMS) is starting to see a turn around in its fortunes? There have been a few recent announcements of new contracts - which by the nature of the business seem to be quite lumpy - and yesterday's RNS was especially upbeat on the company's view on the state of the market now that POO is stabilising above $50/55. Decent Stockopedia rankings and shares up substantially from the low 30p's last summer. Up by 17% yesterday to about 57p and for those of a TA persuasion, it's just gone through a Golden Cross.

http://www.investegate.co.uk/gulf-marine-services-...

Gus.

shipoffrogs

4th Jan '17

Gus
interesting that they signed a contract on the first business day of the year, looks like the client wanted it booked in 2017, not 2016. I wonder if there's others thinking the same way.

Gary Farquhar

4th Jan '17

Annual budgets usually get approved on a calendar year basis for E&P companies (not sure about NOCs?) - so maybe more to come indeed.

Hopefully this contract underpins their near-term forward costs - however they didn't state the fixed contract duration, so hard to what extent (?) Great company, who will hopefully flourish again if the PoO can at least stabilise in the $50-60 region.

Glad I persevered with my monthly purchases - starting to show a healthy return now...

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WarrantStar

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