Industrials: Sembcorp Marine, Boskalis Westminster, Chiyoda Corp, H&E Equipment Services and more

In today’s briefing:

Sembcorp Marine: Beneficiary of High Oil Price? Not so Fast

After a 35% price decline in 2021 and 11% performance YTD, we are exploring if SMM is able to capitalize on the high oil price environment.
We will look at its recent financial performance, orderbook, and financial forecast in 2022.
We will also look at how to value the company and the key risk with our valuation.

On 10 March, HAL Holding announced an intended voluntary public €4.2 billion cash offer of €32.50/share. Coming from a subdued period for the industry, the multiples aren’t too generous: 8.0x EV/22e EBITDA.
A 28% premium coupled with the current volatile market environment means that the offer is most likely to succeed. HAL and associated parties now control 48.9% of the shares.
The median-implied equity value across multiples is €36.36/share, but investors are cashing out now: a vehicle set up by HAL is buying shares in the market at the offer price.

Recent events in Ukraine should be highly favourable for Chiyoda as they raise the potential for LNG capex.
US to Europe deliveries could involve significant liquefaction capacity build-out at good pricing points and even hydrogen could be in the mix.
If orders come through and rising profit drives the share price up that could also lead to positive capital structure changes.

Since my first analysis of the company, H&E Equipment outperformed.
The management has recently announced an ambitious investment program that will result in a rapid expansion of the business.
At the same time, the business is experiencing higher utilization rates, improving margins and upward multiple repricing.

Before it’s here, it’s on Smartkarma