The company’s stock is trading at a P/E of 7.7 on a consolidated basis
Mumbai-based Global Offshore Services has heavily underperformed the market in the past one year due to a bad first half of FY12. With two of its vessels commencing high-value contracts with Petrobras, the scene will improve from the December quarter onwards. Global Offshore faced higher costs without matching revenues in June and September quarters on relocation of two of its vessels to Brazil on the Petrobras contracts. As a result, Global Offshore’s consolidated earnings for the first half of FY12 dipped 63.4% to . 3.6 crore.
Both these contracts have since commenced at rates that are substantially higher to the rest of GOSL’s fleet. At $24,000 per day and $30,000 per day, respectively, their earnings would be more than twice the average earnings of theremaining nine vessels. Similarly, these vessels would also earn a higher profit margin and improve the sagging bottomline in the coming quarters.
The company has 11 vessels — five anchor-handling tugs (AHT), five platform-support vessels (PSV) and one barge — that support the offshore petroleum exploration industry. Four of these vessels are in wholly-owned subsidiaries in Singapore and the Netherlands.
The Singapore subsidiary has sold its vessels to financial institutions and taken them back on long-term bare-boat charters to reduce the strain on balance sheet. The company has sold its older assets from time to time to improve the overall age of the fleet.
Today, except one, all the company’s assets are less than five years old. It has also placed a $48-million order for a PSV to be delivered mid-2012.
Five of the company’s assets will complete current contracts between May and November 2012 and will be available for redeployment. The company’s ability to secure higher day rates will be another positive for its earnings.
The company’s debt stood 2.7 times its equity on a consolidated basis at end-September 2011. This may be on a higher side, but the company has sufficient cashflows to take care of its debt obligations. The scrip is trading at a price-toearnings multiple (P/E) of 7.7 on a consolidated basis, which appears to capture a part of the future earnings growth.
Both these contracts have since commenced at rates that are substantially higher to the rest of GOSL’s fleet. At $24,000 per day and $30,000 per day, respectively, their earnings would be more than twice the average earnings of theremaining nine vessels. Similarly, these vessels would also earn a higher profit margin and improve the sagging bottomline in the coming quarters.
The company has 11 vessels — five anchor-handling tugs (AHT), five platform-support vessels (PSV) and one barge — that support the offshore petroleum exploration industry. Four of these vessels are in wholly-owned subsidiaries in Singapore and the Netherlands.
The Singapore subsidiary has sold its vessels to financial institutions and taken them back on long-term bare-boat charters to reduce the strain on balance sheet. The company has sold its older assets from time to time to improve the overall age of the fleet.
Today, except one, all the company’s assets are less than five years old. It has also placed a $48-million order for a PSV to be delivered mid-2012.
Five of the company’s assets will complete current contracts between May and November 2012 and will be available for redeployment. The company’s ability to secure higher day rates will be another positive for its earnings.
The company’s debt stood 2.7 times its equity on a consolidated basis at end-September 2011. This may be on a higher side, but the company has sufficient cashflows to take care of its debt obligations. The scrip is trading at a price-toearnings multiple (P/E) of 7.7 on a consolidated basis, which appears to capture a part of the future earnings growth.
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