As far as I know the Kvaerner investment was Hitec´s first ever pure financial play public stock purchase (as they usually want a controlling stake in the companies they target). So, if this is one of, if not the best energy Buyout group´s first ever public financial play, it is probably a good risk/ reward.
About Kvaerner: Norway based EPC company (engineering, procurement, construction). Delivers products and services to oil and gas facilities/ structures both offshore and onshore. They have both a upstream and a downstream business.
Kvaerner value drivers:
- No financial leverage. This may be perceived as a positive for a oil service company these days
- A lot of cash in the bank. Kvaerner currently holds more than a billion NOK of cash on hand, this versus a market cap of 2.1 billion NOK. Half the market cap value is cash
- Although the company´s top-line has been hurting alongside the rest of the industry, it´s EBITDA figures are holding up quite well
- The company´s order backlog looks decent, and a lot stronger than what I have seen for many other oil service companies these days
- Solid growth platform and strong management. At some point the oil price will make a comeback, and the service companies with the best platforms will make a lot of money
- Price/ book of approximately 0.9x. Not to shabby taking into account the fact that half the market cap value is cash
Kvaerner order intake and backlog:
Source: Kvaerner ASA
I wrote this article myself, and it expresses my own opinions. I am not receiving any compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
