it's a safe stock to be in, but patience like any good growth share will be required. It has had a checkered history starting of in oil in the 90's and then renewable energy which they sold in 2011, so the New service-focused strategy adopted in 2012 make it a young company if that makes sense. They are moving into profit because of the change in direction primarly due to :
2014 R2S Earn-out target exceeded
2013 SeaEnergy Ship Management business launched
2012 R2S acquired Consulting business started New service-focused strategy adopted
The year-end accounts will show that SEA is in a good financial position meeting expectations with record turnover.
If there is a blot on the landscape it is their legacy asset of 18% interest in Lansdowne Oil & Gas plc which will create an impairment charge. There is plus point in that terms for the farm out of Lansdowne Oil's project has been agreed and when complete will provide approx 5 million to Sea. Not sure how the market will take the impairment charge at year end, although SEA have put this news in the public domain so would expect it to be already factored in.
As I stated as an illiquid stock the price can and will fluctuate on small volume, but long term prospects are healthy and so the Share price should continue it northward journey albeit on a head and shoulder basis.
Just seen post of March 13th. Many thanks, I have just put the revolver back in the drawer. Love this company but driven crazy by the fall in the share price just when they seem to be getting some sales momentum going. Your analysis seems reasonable to me, lets hope you're right.
SEA down 9% down on very, very low volume only 17k sold and 6K buys. So why the movement? I guess many will say that because SEA is neglected, ignored and much unloved it is relatively illiquid. To me Illiquidity seems to be a modern, and in my opinion irrational fear born out of electronic markets, and instant decisions. I would counter by saying from my experience the less liquid a stock is, the better it will perform in the long run, compared with more liquid stocks. The trick is to be patient., but I think patience in the market has been lost with the electronicization of markets.
If I had to guess, I would say most will continue to disregard illiquid assets. It is because of this some incredible bargains exist in illiquid assets. For example My example above isn't fabricated out of nowhere, companies like this exist. For example, SEA at a share price of 28p values the business at £16m, of which £5m is represented by the legacy stake in Lansdowne Oil & Gas. So that leaves us £11m for R2S, assuming the Consulting and Marine divisions are worth zero (being the unproven divisions). R2S produced EBITDA of £2.8m during the 12 months to February 2014. Subtract approx £251,000 depreciation and amortisation cost, and then tax at the standard 20% rate, I get earnings of £2m. On that basis, R2S on its own seems to be valued at 5.5 times earnings (i.e. £11m divided by £2m). That is a bargain in my opinion.
I believe every small investor should have at least 30% of their portfolio in illiquid stock, mine is 50%. One parting thought, for most investors, who aren't wealthy hedge fund managers, their house is their largest asset. For the most part houses aren't liquid assets, but most investors aren't panicking that they can't sell their house at the click of a mouse. Maybe we should approach our investments as we do our house, realize they have value, but that we don't need to sell it instantly.
The announcement of a placing made earlier today by Lansdowne Oil & Gas plc ("Lansdowne") and confirms that SEA did not participate in the placing. As a result its shareholding in Lansdowne remains unchanged at 30,194,193 shares although its percentage holding will be diluted to 18.72% once the placing shares are issued on 12 March 2015.
Nothing untoward in Change of Nominated Adviser and Broker. Just Oriel Securities Limited ("Oriel") their nominated adviser has been transferred following acquisition of Oriel by Stifel Financial Corp.
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