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Trading update highlights Q4 delays

Update | Industrial Support Services | 22 Nov 2017

Medserv's trading update has highlighted project delays that will see H217 miss expectations. A lower Q4 drilling contribution from Cyprus and activity in Iraq falling off Q3 levels prompt us to reduce our FY17 forecasts. However, contracted projects underpin our FY18 estimates and we leave them unchanged.


Momentum to build in H2

Update | Industrial Support Services | 24 Aug 2017

While H117 results reflect a slower than expected performance in each of the key divisions, Medserv looks set to deliver sequential improvement in H2. We have lowered FY17 estimates; however, our FY18 estimates remain largely unchanged as momentum from the increased drilling programme from Q417 should continue. The longer-term investment case is underpinned by established contracts for drilling and OCTG services together with workover programmes. In addition, the company is well placed to secure business in new geographic markets to support growth.


Pieces fitting into place

Update | Industrial Support Services | 30 Aug 2018

Medserv has demonstrated the success of its broadened geographic reach with strong H118 revenue growth and improved profitability. With the required investment in equipment and personnel complete, we see greater momentum and improved profitability in H218. We maintain our forecasts.


Winning ways

Flash note | Industrial Support Services | 26 Jun 2018

Medserv has announced the signature of a second contract for Shore Base Logistics for offshore Cyprus for an international oil company (IOC). Cyprus is a key growth driver for the company’s Integrated Logistic Support Services business. Overall, FY18 has started well for Medserv with contract wins establishing the company now in eight countries as tendering activity continues.


Internationalisation underpins growth

Update | Industrial Support Services | 14 May 2018

Medserv’s strategy to expand its geographic reach and range of services is bearing fruit. FY17 was affected by lower than expected demand and project delays, but Q118 results show strong progress and the order backlog underpins future revenue performance. A change of management and key shareholders at an early stage to source a strategic purchaser have also been announced. We reduce our FY18 estimates on the lower run rate out of FY17 and introduce FY19 estimates.


Discovering and delivering

Flash note | Industrial Support Services | 12 Feb 2018

Medserv has started FY18 with a positive operating backdrop. Last week, ENI announced a lean gas discovery in Block 6 Offshore Cyprus. Meanwhile, the company has reported further success with its strategy to expand into new territories, with a three-year contract. We believe that building operational visibility in Cyprus while expanding internationally supports the potential for substantial revenue growth for 2018-20.


Stabilising the platform

Flash note | Industrial Support Services | 25 May 2017

Medserv issued an interim report on 22 May that indicates a stabilisation of the outlook for the group. METS appears to be trading strongly and while the onshore base support activities are still depressed, these should progressively recover in the second half. The reaction to the challenged FY16 results and more tempered outlook, while unsurprising, leaves the shares looking increasingly attractive against our fair value estimate of €1.83. There is scope for this discount to reduce as trading improves in H217. A FY18 P/E of 13.0x does not appear overly demanding given the potential for continued recovery and growth thereafter.


Executive Interview – MedServ

Edison TV: | Industrial Support Services | 15 May 2017

Anthony Diacono is the group executive chairman and CEO as well as being one of the principal shareholders in the company. In this interview he discusses Medserv’s unique positions and the successes delivered during a very challenging period for the sector.


FY16 results

Update | Industrial Support Services | 06 Apr 2017

2016 turned out to be a far more challenging year for Medserv than we had anticipated. Project delays compounded the cost-saving actions of major customers in a depressed market. The delays are also likely to adversely affect 2017 prospects, especially H117, resulting in a sharp reduction in our near-term estimates. Longer-term cash values hold up well, assuming the stabilisation in market conditions persists, and our revised DCF value is now €1.83 compared to €2.03 previously.


Record contract award and update

Flash note | Industrial Support Services | 27 Feb 2017

METS, acquired by Medserv last year, has been awarded a major supply contract by Sumitomo. The contract is significant because it represents the largest contract ever won by Medserv, underpinning METS activities with extended scope, which further justifies the purchase price. Despite challenging markets Medserv continues to successfully renew existing services contracts that underpin its core performance. Although the update in Trinidad indicates the loss of the initial tender for an onshore base for an oil major, other opportunities in the country are progressing, including a current bid awaiting adjudication. A number of incremental prospects also remain in Medserv’s other key regions of operation, notably offshore Libya, Portugal, Cyprus and Egypt.


ENI North Africa renewal

Flash note | Industrial Support Services | 23 Nov 2016

Following on from the Q3 trading update, Medserv has announced the renewal of the second core contract from ENI for the Malta base. It has now won both contracts let in Malta for Libya operations this year. The company has thus secured its core business for the Malta base from 2017 to 2019. New opportunities in the eastern Mediterranean and resumption of drilling offshore Portugal, together with growth of METS in the Middle East, should support growth in FY17.


A hint of Eastern promise

Update | Industrial Support Services | 21 Nov 2016

The Q3 trading update indicates that, despite the very challenging macro environment, Medserv is maintaining a robust overall performance aided by the initial contribution of METS. Opportunities, especially in the Eastern Mediterranean, continue to support a view of improved organic development in FY17. Our numbers are unchanged and our fair value calculation currently stands at €2.03 per share.