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Oversold or over-bought?
PFC advertising on Linkedin for M&A hires .... looks like we're going to buy something! Could it be we are bidding for Wood assets??? We'd have to raise money of course. Either way, great that they are starting to think about growth, whether organic or inorganic.
I've been seriously looking for an entry point .. but can't convince myself the pain is over here. How is it able to bounce back, given the news that 'at least' 19:1 dilution is coming? The only possibility I see is that people hope this means that the dilution gives the SOA approval a much better chance ... but in that case I am still better of waiting for post dilution before jumping in?
Wood taking over PFC is not serious (I think someone posted that tongue-in-cheek). What's true is the following: Wood is planning on selling a part of their business for $2.7bn - a unit that has ~$1.3bn in sales. It allows one to get a clearer idea of how to value PFC as well, who does $3bn turnover. Does that mean that PFC's valuation should be a pure 'pro rata' of the Wood comparable? No. But it helps to get clearer about where valuation could lie (if they were to be sold). Nobody is seriously suggesting they will be sold; rather, it is the fact that ~$3bn turnover should not be valued at $1bn market cap. In fact it should be MUCH higher.
Thanks SS - indeed .. for clarity, i was only comparing Wood Group's unit that is up for sale (the Built Environment unit). I've laid out that unit's specific numbers. I also assumed that the unit is sold debt-free which I think is the case (all debt remains in the parent company, and is settled from the sales proceeds). Still, the point is: given the comparable, PFC should be 5-6 times higher ... unless someone tells me the numbers are wrong.
Ha! well indeed ... actually, i would love it someone has capacity to fact-check me on this ... if it is indeed right, then either: Wood is totally overestimating their sale value, or PFC is woefully undervalued
Based on quick comparison:
Wood (Built Env) .... Petrofac (Group)
Revenue: $1.3bn .... $3.0bn
EBITDA: $130mn ... ?
Debt: Zero ... $300mn?
Valuation: $2.7bn ... $1bn
Is this right? The Wood Build Environment business is potentially being sold for $2.7bn which is 2x revenue minus debt. If the PFC group is valued on that basis we are many multiples from where we are today ... what i am not seeing?
Well .. hence my question on the comparison versus Wood ... the question is whether to rather buy Wood's consultancy business at £2bn, or whether to buy PFC at £750mn ... admittedly different pipelines etc.