LON:LAM - Lamprell Plc

[kirkomi]

Hello All,

 

I would like to know your opinion on this rig maker/refurbisher. After Altius, this is my best idea this year.

 

http://seekingalpha.com/article/1903651-lamprell-a-great-business-reeling-from-temporary-setbacks

 

A brief overview of the investment is as follows.

    - Leader in new buildup jackup rig in the middle east, based in UAE. Around $1B in revenue.

    - Natural barrier to entry because it owns nearly 2.5Km quayside access to the Gulf. Has historically quite high RoIC (in the range of 40%).

    - Historically a very conservatively managed company with no long term debt.

    - The founder is the president of the company and owns nearly 33% of the shares outstanding.

    - The share price crashed in 2012 because of delays in one of its projects. The company showed a loss of $110M.

    - The FSA investigated the company because 2 members of the senior management sold shares (worth nearly $2M) just before the profit warning. The management countered that these members do not sit on the board and hence had no access to insider information.

    - Historically the company has had 10% net margin. A P/E of 10 will yield a "value" of $1B. The company has a market cap of ~ $500M. There is around 100% upside at these prices.

 

Thanks.

 

[A Dhandho Investor]

Hello All,

 

I would like to know your opinion on this rig maker/refurbisher. After Altius, this is my best idea this year.

 

http://seekingalpha.com/article/1903651-lamprell-a-great-business-reeling-from-temporary-setbacks

 

A brief overview of the investment is as follows.

    - Leader in new buildup jackup rig in the middle east, based in UAE. Around $1B in revenue.

    - Natural barrier to entry because it owns nearly 2.5Km quayside access to the Gulf. Has historically quite high RoIC (in the range of 40%).

    - Historically a very conservatively managed company with no long term debt.

    - The founder is the president of the company and owns nearly 33% of the shares outstanding.

    - The share price crashed in 2012 because of delays in one of its projects. The company showed a loss of $110M.

    - The FSA investigated the company because 2 members of the senior management sold shares (worth nearly $2M) just before the profit warning. The management countered that these members do not sit on the board and hence had no access to insider information.

    - Historically the company has had 10% net margin. A P/E of 10 will yield a "value" of $1B. The company has a market cap of ~ $500M. There is around 100% upside at these prices.

 

Thanks.

 

I am also invested in this one. The red corner laid out the thesis in 2012:

 

http://quinzedix.blogspot.be/2012/12/lamprell-plc.html

 

The point is that they showed a loss on one of their side-projects, but the shareprice crashed far more than the loss incurred on this project.

 

After the hiccup, lamprell decided to focus on what it is good at: building rigs. In this respect, they for example announced today the sale of one of their non-core assets:

 

http://www.lamprell.com/~/media/Files/L/Lamprell-v2/media/releases/2014/03-03-2014.pdf

 

The proceeds will be used to pay down the most expensive part of the credit facility issued last year. Earlier this year, they already announced results ahead of expectations. If they continue to execute like this, I believe that this indeed can be a great investment.

 

 

[yadayada]

So a net cash position of more then half the market cap, and net income was 46m on a 500m market cap in H1 this year. So could be 80-90m ? Looks really cheap.