RE: AMED & Presentation on Thursday.6 Jul 2014 19:56
So, firstly Zafar Karim the Executive Director presented. A link to the slides he used are above.
I dont think everything cna be mentioned as some was quite detailed and technical inits nature. But here goes my main takes:
- The $1.8Bn order for Semi-subs is not dead and in fact talks are continuing. The issue is that the customer needs to meet the conditions precedent for it to be formalised. Some of these are yet to be met. Talks are continuing. Zafar went as far as to say that the announcement should never have leaked and that it was the time of the Chinese New Year and someone from YZJ had been 'celebrating' and blurbed it our oh I mean mentioned it to a broker who was at the party.
- The presenter asked Zafar whee there any other orders expected. Zafar's response and reaction was very interesting. He paused, smiled and basically said that a number of discussion were happening right now. And while nothing is ever guaranteed that they were hopeful. He also emphasised that the nature of these types of deals in their very nature are that they take time (many months) to negotiate. I cant remember if was in the same response but at one point Zafar also said that Glen Lau was supposed to be there to present himself but that he couldnt as he was at a very critical and sensitive stage of negotiations. To me he implied a contract was very close to being confirmed.
- The yard should be fully completed and ready in Autumn of this year
- He emphasised the capacity of the new yard and also at the same time the long lead times for each rig build. But that with a new yard coming on line, the market for drill rigs is very healthy that they were positioned to take advantage. (My summary).
- He also made light of the importance of the link with the biggest shareholder (Qatari) and Glen Lau in the rig building business.
- If a rig wasnt paid up by the time it was built then it is of no issue as they would then plan to rent it out at circa $200k a day. They do not incur a cost as the rig is built as the way the materials are procured is that it is on credit and as payments are received then that is used to pay the debt off. (ie. no cash flow cost to AMED).
- MGR Resources; Nothing new here really and he mentioned again that they are looking to get into supplying the metals for rig build and ship builds. They are also in talks to increase the amount they broker for.
- He doesnt see a need to raise further monies any time soon.
Basically, its as we all know, One order and this will go BOOM! That in my opinion is not too far away. The fact that the yard will be ready soon says to me that they will have one or two things to crack on with. Oh and the firts order typically is at 10% margin then after that they are 20% margin he said.
Interesting few weeks and months coming me thinks!
Sign In
Follow the stocks
