Medium term
Trade view / 29 July 2016 at 9:17 GMT

Fugro offers potential as market recovers

Director / PIA-First Limited
United Kingdom
Instrument: FUR:xams
Price target:
Market price:

Fugro (FUR) provides support services to the offshore energy industry.

MarketCap: $1.46 billion / €1.33 bn / AUD 1.95 bn (figures rounded up)
Sector: Oil Support Services
Headquarters: Netherlands
Primary listing: Amsterdam AEX


Prices have reacted positively from the dip to €10.00 in February. A sustained drive higher was capped by the upward-trending top of the wedge formation, which prices currently trade within.
Buyers were once again evident, on a trend and horizontal basis, in early July. 

Current cloud resistance is capping gains, but buying interest is now evident around the €15.00 area.


Medium term: FUR benefits from a global footprint and a Q1 order backlog of €1,176 million.

Longer term: Management is adapting to the more challenging market backdrop through effective cost management and adjusting capacity to match that of market demand.

Growth: It is PIA’s expectations that global energy demand should continue to increase over the medium to longer term, with the price of oil moving steadily higher from its January 2016 lows

Sales development

Recent results: As of Q1, management noted that “…the company is well positioned to benefit from the recovery in the market when the supply-demand balance is restored and markets start to recover."

Net debt/ EBITDA: As of Q1 1.7x, 2.2x Q12015
Standalone valuation: FUR trades at a discount to its forward Ev/ Rev historical average.

Competitor/Industry valuation: Trades at a premium to its peer group on a number of forward metrics.  

Backlog trend: As of Q1, the 12-month order backlog stood at €1,175.8 million (versus €1,610.2 million for Q1 2015).

Revenue Development

FY2016: Outlook: “Positive cash flow, further reduction of cost base and severe pressure on margins.” Source: Q1 trading update.

Investor stock sentiment: Currently an ‘Underperform’ on the name – Source PIA research.

FUR is set to report H1 numbers on August 4, 2016.

Management and risk description

We look to set longs at current levels, and offer dip-buying and buy-a- break levels. We would look at a break of €13.00 as a failure, and stop out accordingly.


Entry: buy at current levels €15.45.
   for breakout buyers (B): We would highlight €16.60 (late July 2016 rejection level).
   for pullback buyers (P): We would highlight €15.25 (late July 2016 lows) and €14.00.

Stop: a break below €13.00.

Target: €20.00 and €23.00.

Time horizon: six months.

 Charts source: Saxo Bank

— Edited by D. Deacon

Non-independent investment research disclaimer applies. Read more


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