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
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
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).
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.
— Edited by D. Deacon
Non-independent investment research disclaimer applies. Read more