🕐27.03.14 - 12:54 Uhr

PLEXUS: INTERIM RESULTS (CENKOS) RESEARCH BUY TO £3: DOUBLE DIGIT H1 REVENUES A
ND PROFITS GROWTH SEES DIVIDEND UP 9% AS BEST IN CLASS WELLHEAD EQUIPMENT GAINS TRACTION AMONG BLUE CHIP OIL & GAS OPERATORS



Plexus Holdings (POS) is a Great British oil and gas engineering success story that punches well above its £237m+ market cap in the multi-billion dollar oil and gas wellhead equipment market.

As a result of continued strong growth in its best in class wellhead equipment rental business, Aberdeen based Plexus reported another record set of strong Half Year Results (PBT: £1.54m; revenues £12.64m; and EBITDA to £3.66m) which led to a 9% increase in the dividend to 0.48p.

Thanks to its proprietary POS-GRIP® technology, Plexus has pioneered a safer, more cost effective, reliable and technically superior wellhead which it supplies to many of the blue-chip oil and gas operators worldwide.
Brokers Cenkos have today assigned a £3.00 price target (current sp up 3.5% to £2.81) to Plexus’ stock, noting “We are highly encouraged that both JIPs are progressing to plan.

In our view the unique enabling features of POSGRIP engineering has the potential to transform the subsea HP/HT industry.

We see the potential for the shares to move beyond the 300p level as the company delivers on JIP milestones and into the field trials.

BUY.” Please see below and attached Having battled with incumbent suppliers who have dominated the industry for decades, Plexus’ wellhead equipment with its proven, disruptive technology is gaining traction within the industry.

Major operators are increasingly using Plexus’ wellhead systems which to date have been used in over 300 wells worldwide by the likes of BG, BHP Billiton, BP, Brunei Shell Petroleum, ConocoPhillips, Tullow Oil, and Wintershall, a testament to the commercial strength of Plexus’ offering.

Plexus has merely scratched the surface despite the excellent growth seen to date.

The Company is successfully expanding from a dominant position in the North Sea, HP/HT market, into new geographical areas such as Africa, Asia and Australia.

In 2013, it secured four contracts in these regions to supply operators such as BG Group and ENI and having recently incorporated new subsidiaries in Asia to strengthen Plexus’ presence in this region, the Directors expect an increasing amount of business to be secured outside Europe. In addition to the growth potential at its core oil and gas exploration wellhead business, there is tremendous scope to expand its family of POS-GRIP equipment into other multi-billion dollar markets, thanks to the proven superior safety and cost benefits that its technology offers.

In this regard, the Company has already made much progress particularly in the production and subsea markets.

Plexus has set up a joint industry project to design and develop a subsea wellhead, addressing a number of key technical issues that have arisen following recent offshore well incidents around the world including Macondo.

Six majors have signed up to the project including Tullow Oil, Shell, Maersk and Wintershall Eni S.p.A.

The design process has now been completed and prototype testing is due for completion mid-2014.

With additional strong growth targeted at its core wellhead rental business and progress at the subsea wellhead project expected, 2014 is shaping up to be a highly exciting year for the Company. The Company are available for meetings 4th April and 8th April – please let me know if you would like to meet with the Company. Best Felicity
Felicity Edwards St Brides Media & Finance Ltd 3 St Michael’s Alley, London, EC3V 9DS www.stbridesmedia.co.uk Tel: 0207 236 1177 | Mob: 07748843871 | Twitter: @StBrides1
AIM - Oil Equipment & Services [Description: Description: Description: Description: Cenkos] [Description: Description: Description: Description: Cenkos]
Plexus Holdings – Interim results (POS.L, Price 272p [COB 26/03/14], Mkt.

Cap.

£230.9m, BUY)
Plexus has delivered another solid set of interim results which in the context of depressed exploration activity in the North Sea (conventional wells) is testament to the unique enabling features of POSGRIP technology and the resilience of the HP/HT market.

Demand for their proprietary HP/HT wellheads continues to gather momentum on a global basis with rental revenues rising 15% to £10.9m, accounting for 86% of Group revenue.

The offshore E&P industry is contending with the challenge of finding new reserves in the face of escalating costs.

This reinforces the critical importance of the Plexus subsea HP/HT joint industry projects (JIPs) which are moving towards an advanced stage. n Results.

Revenue increased 12% to £12.6m.

Underlying this was an increase of 15% in the HP/HT segment against a decrease of 24% in the standard segment which is more exposed to conventional drilling activity in the North Sea.

Gross margin and EBITDA margins were slightly lower at 69% and 29% respectively.

PBT increased 13% to £1.5m and EPS increased 12% to 1.9p. n Investment.

The Company continues to invest ahead of expected growth with capex of £1.8m for 2 HP/HT wellhead sets and increased spend in R&D and patents to £0.8m.

Premises have been secured in Singapore to support a new Asian business hub.

Supporting this was very strong cash generation at £5.0m (280% conversion rate), benefiting from a WC inflow of £1.4m.

At the end of Dec 2013 net cash was £2.7m. n Forecasts.

We are leaving our forecasts unchanged for 2014 but would highlight that recently announced HP/HT contracts have secured rental tariffs above what we have assumed in our model.

Furthermore, once the new Asian hub is established, utilisation rates should improve due to shorter refurbishment cycles. n Recommendation.

We are highly encouraged that both JIPs are progressing to plan.

In our view the unique enabling features of POSGRIP engineering has the potential to transform the subsea HP/HT industry.

We see the potential for the shares to move beyond the 300p level as the company delivers on JIP milestones and into the field trails.

BUY. Analyst – Ian McInally – 0131 220 9777 / 020 7397 8916 Sales – Iain Macarthur – 0131 220 9776 / 020 7397 8916 Sales – Gregor Paterson – 0131 220 9779







Products & Services | Jobs