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Saipem maintained the upward momentum in the top-line and margins as the management has been reassuring the market for the past year following the capital increase. H1 revenues reached €5.3bn, up by 28% yoy. EBITDA recorded a more impressive increase at 68% and was on track to achieve the company’s FY guidance. The working capital outflow of €121m due to the backlog review weighed on the half-year operating cash flow, which was still strong enough to cover the capex.
Companies: Saipem (SPM:BIT)Saipem S.p.A. (SPM:MIL)
AlphaValue
Net income at breakeven was a welcome development after a long sequence of negative results since Q3 FY19. Annual margins will remain in line with the Q1 (7.4%) as the onshore EPC business will lag. Working capital management positively contributed to cash flow thanks to the sound cash profile of projects. There are no plans to raise new debt currently due to the inauspicious market environment as the available cash covers the debt maturities until FY25 and new facilities worth €860m provide a g
A booming upstream investment market boosted Saipem’s order intake and revenues by a respective 86% and 53% in FY22. The diluting backlog review, higher net financial expenses, higher taxes paid on revenues, a significant negative contribution from equity investments and the closure of the Russian activities all led to a negative net result, preventing Saipem from enjoying a net profit in an auspicious market environment.
After a successful capital increase thanks to which Saipem reduced its net debt massively, the recovery gained momentum in Q3 with a healthy order intake and the timely execution of projects. With a 9M adjusted EBITDA of €536m already surpassing the previous guidance, Saipem is now guiding for €550m for the year-end.
No negative surprise this quarter, the results coming in slightly above consensus with an adj. EBITDA of €148m and an adj. net result of €-32m. Revenues increased by 49% qoq in the E&C Offshore division to €1.2bn, while the EBITDA margin improved by 30bps to 8.1% (EBITDA at €101m). The 2022-2025 targets were confirmed (with FY22 adj. EBITDA of €500m).
Companies: Saipem S.p.A. (0RPI:LON)Saipem S.p.A. (SPM:MIL)
One month after the update on the recap and FY21 release, the Q1 results were without incident (on the financials), which is a positive given the current context. The adjusted EBITDA stood at €145m, against guidance of >€500m for FY22, i.e. a good start to the year for Saipem. The management confirmed the guidance and the company has received the advances from Eni and CDP (€650m) as well as the liquidity facility from banks (€850m).
Reassuring update showing no further deterioration in the backlog, an outlook looking more realistic than the previous one, and a robust financing package supported by the existing shareholders. While we don’t know yet what will be the dilution, this package is enough to put the company in a solid financial position and allows Saipem to focus on project execution and delivery of the backlog. The negative is on cash generation, which will become meaningful only in 2025.
The stock is down 25% as the company revises its backlog and initiates discussions with lenders and main shareholders for financing support. Margins are deteriorating in E&C as the company struggles with the pandemic, increasing raw material costs, and supply chains. Not a good look for the CEO, who presented his strategy and guidance only three months ago.
The results were below consensus with revenues of €1.9bn and adjusted EBITDA of €-25m, and H2 guidance is lowered to revenues of c. €4.5bn, while net debt is guided for a €500m increase by end of FY22. Given the company’s recent issues, the short-term concerns logically take priority over the 2025 plan. It seems that Saipem will have to reassure first before being valued on what management says it will deliver by 2025.
Another difficult quarter with an EBITDA of €-266m, way below consensus. Saipem continues to suffer in its core divisions from delays in project execution, the suspension of Mozambique LNG and operational issues in offshore wind. This prompts management to discuss with its lenders as it will breach its financial covenants at the end of the year. A small positive is the updated outlook for revenues of €7.7-8.2bn, higher than our estimate of €6.4bn.
Double-whammy for the contractor, which posted results below consensus and is left with many unknowns in Mozambique. The pandemic continues to impact project execution with delays and rescheduling. In Mozambique, Saipem is in close cooperation with Total and is not in a position to evaluate its impacts on its financials for 2021. The contract is worth €4bn in Saipem’s backlog with €1.4bn for the rest of the year.
Q4 revenues improve 15% qoq, which only met the timid outlook provided in Q3, and margins are declining further as the company is having issues on a renewable project. Management commented that “2021 is certainly not yet a back-to-normal year” and did not provide any meaningful guidance, only that net debt is expected to rise with higher capex. The only bright spot is on the order intake with the award from Qatargas.
The group showed revenues improving by €200m qoq, with the activity picking up only in onshore E&C. The soft guidance was reiterated, the management expecting H2 to be substantially in line with H1, which we believed was too conservative at the time. With Q3 results now in, this no longer seems to be the case. On the positive side, the group has renegotiated its financial covenants.
The hit was harder than expected with postponements of contracts and slower activity. While management expects a gradual recovery in H2 and a “more normal 2021”, a cost savings programme has been launched to offset part of the postponements this year.
Companies: Saipem S.p.A.
The mere €15m of orders intake in drilling activities highlights the poor state of the services industry. Understandably, management has withdrawn its guidance and could not provide an updated one on the “continuing highly unstable environment”. However, the press release also mentioned “good future business opportunities”. If this is a way to spark enthusiasm, we believe it was unnecessary as it adds confusion.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Saipem S.p.A.. We currently have 47 research reports from 3 professional analysts.
Companies: Mpac Group PLC
Shore Capital
AUCTUS PUBLICATIONS ________________________________________ ADX Energy (ADX AU)C; target price of A$1.00 per share: Important step to unlock Sicily – The Italian ministry has informed ADX that it will be granted the d 363C.R-.AX gas exploration permit in the Sicily Channel. In addition, the Regional Administrative Court of Rome has annulled the Plan for the Sustainable Energy Transition of Eligible Areas that prevented the oil redevelopment, appraisal and exploration activities on the licence.
Companies: PEN EQNR ENI TCFF SEI OKEA GPRK ADX REP AKRBP RHC RHC SOU ITH REP SQZ TRIN SOU I3E ZPHR NOG LNGE TTE PEN ENI EQNR VAR OKEA
Auctus Advisors
Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well
Companies: Norcros plc
Edison
Companies: GAL BEM AAU SHG GGP AAL SLI 1SN EEE TECK
SP Angel
ITM has announced a new preferred supplier agreement with Hygen, potentially driving new orders for 200MW of electrolysers for the company going forward.
Companies: ITM Power PLC
Zeus Capital
Somero reported FY23 results in-line with expectations, showing challenges in the North American market, offset by gains from the relaunched S-22EZ availability in H2 and strong growth momentum continuing in Australia. Management cautiously guides to a flat revenue year, which may offer some upside. We make no changes to forecasts, which are pitched conservatively and may offer some upside scope with the launch of new products. We retain our 585p target price which offers significant upside to c
Companies: Somero Enterprises, Inc.
Cavendish
Thruvision’s year-end trading update confirms revenues broadly in line with our expectations at c.£7.8m, and an EBITDA loss of c.£2.5m. There is good momentum from both new and existing clients, with Thruvision reaping the benefits of a broad customer base, spanning a number of international markets. Adjusting for the impact of US Customs and Border Protection (CBP) orders, revenue growth was 85% to £7.6m (FY23: £4.1m). Demand has been strong from the Entrance Security market given the worsening
Companies: Thruvision Group PLC
Progressive Equity Research
Invinity’s update on discussions with strategic investors reveals interest from multiple parties. While this has slightly delayed finalising an agreement it increases the potential for a better outcome. Although details are unknown at this stage, we think there is enough in the statement to be comfortable that any agreements will be consistent with the company’s strategy of growing market share in core markets and using a licencing and royalty model in other markets.
Companies: Invinity Energy Systems PLC
Longspur Clean Energy
The recent positive trading statement has provided a short-term catalyst for the shares. In view of management’s target to double sales by 2018 and the strong operational drop-through expected, we still consider the shares to be significantly undervalued. A strong product range, a robust strategy to expand overseas sales and an experienced management team all provide confidence in Somero’s ability to deliver on its strategy. We initiate coverage with a target price of 185p, based on a 2016 P/E t
Companies: MPE TRI VNET BVXP HVO
Companies: Costain Group PLC
Liberum
Despite multiple upgrades, Yu Group has again exceeded our forecasts. FY23A has delivered +65% YoY organic growth and guidance for this year is +50%. Trading arrangements have been optimised in the new year with an agreement with Shell. This releases much working capital back into the business. The dividend has been hiked and management is flagging further potential returns to shareholders. The £100m+ net cash balance is driving the EV/EBITDA valuation down to unsustainable levels. Buy.
Companies: Yu Group PLC
Van Elle has announced interim results to 31 October 2023 highlighting a resilient performance despite subdued UK construction activity. Whilst the outlook for the rest of the year remains challenging overall, particularly due to low housebuilding and rail sector activity before the start of CP7, Management is confident in meeting full year expectations. The H1 2024 results provide c. 50% cover to our unchanged FY24 revenue and EBIT estimates. With green shoots emerging, we expect activity to be
Companies: Van Elle Holdings Plc
Companies: eEnergy Group PLC
Canaccord Genuity
Companies: 88E RNO TRIN KRM EXR BOOM
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