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!but why should it be that high?ā The majority of the newly awarded contracts are from the renewable sector which have better profit margin(10% +) The bid price will be mainly based on the forecast EBIT of the estimated total revenue of $12B between Dec 24 to Dec 26 and a multiplication factor between 3 and 6. As PFC is in distress , 3 is used to calculate the value of PFC = > $3.6B. The bidder would play safe to cover any miscalculations or PFC hidden debts/ problems (which might surface after the takeover) by dividing $3.6B/ 2 =$1.8B That's where the range of S1.5 to $2B comes from.
āA big company with deep pockets will play hard ball ā if they are the only bidder. Remember most of the time, buying a company at a right price with minimum risks for its future earnings not its past
Sandancer - How much is a high offer ? low ball offer ? 552 m shares in circulation , if you buy 5% (28m shares) @ 25p /share which will cost you ~Ā£7m. Do you think BOD will take any notice or change their strategy / plan? If lots of bonds have snapped at at less than half face value, its means the buyers have the confidence that PFC will emerge from distress as a viable firm otherwise they would not touch it.
Just looking at Halliburtonā 23 finance: $23B revenue, Gross profit margin ~ 19%, net profit $2.6B vs PFC : 2.6B revenue , Gross profit margin ~ -5% and $340M loss + $850M debt ($250M to be paid by Oct 24 , $600M to be paid by Nov 2026). However, PFC has an order book of $8B+. It is no brainer for Halliburton to takeover PFC at the cost of $1.5- 2B then parachute their people into PFC to turn it around by improving its margins then keep all the profits (and future contracts) for themselves after 2 two years.
In the past (between 2011 -2017), US oilfield services giants Amec ,Schlumberger and Halliburton were understood to be among the firms circling Petrofac. Will the history repeat again ? Any ideas ?
Bearhunter - "the enterprise value of VENTERRA GROUP PLC at Ā£210.7m based on a Turnover of Ā£97.1m and 2.17x industry multiple "
Bearhunter - "the enterprise value of VENTERRA GROUP PLC at Ā£210.7m based on a Turnover of Ā£97.1m and 2.17x industry multiple "
Bearhunter - I have doubted very much AA put his entire fortune into Petrofac basket. Also his newly created company -Venterra Group Plc ( Serving Offshore Wind Industry, the same industry which Petrofac is heading to) is doing quite well and it could be partially used to bail out PFC. Time will tell.
PaulCurtis - "PFC need one investor with deep pockets and a significant existing equity holding to protect. But is there such a beast?" I will not be surprised at all if Ayman Asfari - the billionaire and the founder of Petrofac and the current Petrofac Non Executive director is one of the white knights." "PFC need one investor with deep pockets and a significant existing equity holding to protect. But is there such a beast?" I will not be surprised at all if Ayman Asfari - the billionaire and the founder of Petrofac and the current Petrofac Non Executive director is one of the white knights.
"the Group continues to make good progress with contracts awarded in 2023, which increased the backlog of the Group to over US$8 billion.
It is also making good progress in closing out its legacy portfolio and unwinding historical working capital. It has continued to maintain liquidity above its financial covenant and will provide further details on its operational and financial performance within the Full Year Results announcement in Aprilā
PLUS No contract cancellation, no further warning about EBIT or additional debt, CEO and/ or financial director did not leave with immediate effect.
= > Good enough for me to hold.
Based on last year announcement, we would know exactly the full year 2023 date by Wed 28th Feb. https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4248000&lang=en-GB&companycode=uk-pfc&v=
And the motive ? In order to have EOY/ Xmas bonus then find another job in Q1/24 :)
Just look at historical data, the highest number of the won contracts are in the first three months of any given year. Therefore, the BOD forecast value of the order book ā $8B by end of Mar 24 is reasonable, as till 20th Dec 23 the new order intake =$6.8B and we should not be surprised to see few announcements from PFC in the coming days to confirm this.
PhatStyle4321 - On 31st Oct PFC began to work on the 700m contract which was awarded by ADNOC on Jun 30/ 23 . It meant they were able to get advance Payment and performance bonds (up to $70m) for it. Hopefully, a similar update about $615m ADNOC contract won on 4th Oct 23 will be available by end of Feb 24. https://www.upstreamonline.com/field-development/european-contracting-giant-kicks-off-work-on-strategic-adnoc-gas-facility/2-1-1544415?zephr_sso_ott=xMKnAJ
Traxpern - Let's assume BOD and advisors/ consultants done their bits successfully -sorting out the temporary cashflow and legacy issues by Q1/24, correcting the balance sheet and improving their margin to 4-5% by Q1/25 plus no takeover bid then I can see dividend will be restored and an EBITDA of at least ~$300m by Q4/25.
Traxpern - " would increase the project win percentage rate would it not?" Yes, it would, as success builds upon success. BTW, 14% win rate is prior to new and renewable energy projects. So $8.7B is min.
Traxpern - from historical data, PFC has had only an average hit/ winning rate of 14% => only $8.7B ....
PaddiG - With enormous and critical tasks at hand, no way they can complete by Wed 20th Dec. The best they can do at the moment is obtaining a bridging loan to give PFC a breathing space 3 ā 6 months till the funds are available from sale and restructuring. I prefer them go through the review thoroughly and carefully as it is their last throw of the dice.
PaddiG - Generally speaking, businesses sell for between three and six times their EBITDA (earnings before interest, taxes, depreciation, and amortization) and H1/23 EBITDA of IES (which incl. PM304) ~ $48m , based on $96/bbl. Now oil ~$75/bbl => 2023 EBITDA of IES~ $85.5m . So If PFC could offload the whole IES then they could get between $256 m and $513m.
Snapper10 - I am sure the lenders, PFCās clients and suppliers will use your analysis and assessment to make informed decisions instead of the ones from S&P and Fitch . Ha ha ha.
With asset sale of IES for ~$60-70m ?? In the past ,PFC did the same thing for $150m on average ! Who would be mad or stupid to sell an profitable business with EBITDA of ~90m for 70m ?. https://www.reuters.com/article/us-petrofac-firstreserve/petrofac-forms-1-25-billion-venture-as-it-refocuses-business-idINKBN0F11IN20140626/