If you mean Su's countersuit: that's BS. His lawyers routinely countersue to make things more complicated for the claimants and hope to get the claims against him dropped or reduced. As far as I know, that makes his lawyers rich but usually gets Su nothing except time. On the other side, I don't know if the company's claims against him have any merit. The parties are supposed to be in arbitration now.
(April 6, 2015)
Market Cap /2015 Cash Flow:
(VTG:$ .31/sh, PACD $4.2/sh)
That's a whopping factor 5.6!
Is there a reason for that? – Not really, as the comparison of some financial data show.
Both companies do have modern fleets, while fleet sizes aren't too far apart. Assuming that 4 jack-ups = 1 class 6 ship (Ebitda wise), the Ebitda capacity currently stands ad 7:4. By the end of 2016 it should be 8:5 in favour of PACD
For 2015, -VTG's fleet capacity is 87% covered by contracts, for 2016, It's slightly below 50% (assuming that the Cobalt starts working in 2017)
For 2015 PACD's fleet capacity is 70% covered by contracts, for 2016, it's 50% (assuming that Zonda starts working in 2016)
No advantage for PACD here!
Assuming that class 6 day rates remain around 400k/d this year, that the 2 idle PACD ships get a contract at the beginning of May 2015 (optimistic) and that VTG gets jack-up renewals around 115k/d, I obtain the following results (ship operating ratio 92.5%) for 2015:
Cash EPS (=Accounting EPS excluding deferrals and non cash interest costs)
PACD: $ 0.33
VTG: $ 0.24
Net debt, end of year:
PACD: 2850M (excluding the Zonda financing, which will add 400M)
VTG: 2580M (after the Cobalt prepayment)
Annual Revenues/ Net debt:
That 20% ratio difference doesn't justify the valuation ratio difference.
Sentiment: Strong Buy
Of what I know, Bovepa trading closes 5 min before 17h local time. But the Yahoo 1 day Bovespa chart (GFSA3.SA) shows a recovery of the share price - with real volume - from 1.81 to 1.85 in the last 5 minutes to 17h. How real is that? - That would mean 1.19 US$ with the closing exchage rate of R$ 3.10/US$ - much more than usual.
Management sees a big shakeout in the floater market with possibly up to 100 old rigs getting scrapped in the next two years. The cold stacked will not return. The size of the floater fleet could fall back to the 2010 level. With oil prices and spending recovering, there is likely a severe shortage of floaters developing after 2016 with day rates recovering to the old heights. On that basis of thinking, management will certainly not accept contracts near current day rates after 2016.
Cobalt: delivery realistically postponed way into 2016. Delivery and financing only when having a good contract at a day rate significantly higher than the current day rate.
50M face value bought back so far this year at a huge discount, providing significant earnings contribution. It's intended to buy back all the convertibles.
There is reasonable market demand from jackups in the 100k to 140k/d bracket in Asia. The Aquamarine will have some idle time and move to a new customer. Its excellent operating history will be a plus in the contract negotiations.
As of Dec 2015, Anchorage holds 27.6M shares + $3.3M in convertibles.
The filing says: "Each of the Reporting Persons may be deemed the beneficial owner of approximately 1,381,475 Shares obtainable upon conversion of $3,300,000 of the Note"
Right now It would be silly to convert at $2.39 /share. Better collect the interest or sell the converts and buy shares for the money.
Sentiment: Strong Buy
I guess the company is buying, but buyback rules are certainly imposing limits.
Right now, bad economic news is hitting the stock market and the currency. Analysts had expected an exchange rate of 2.80 by the end of 2015 and 2.9 by the end of 2016. We are nearly there.
Once we see some exchange rate stability, we should see increasing foreign money inflows into fixed investments and portfolios, attracted by the high yields and low valuations, which could partly reverse the currency decline. Brazilian Government bonds yield 12.5% currently.
For the stock market, we probably need a signal from the Central Bank that the tightening cycle has peaked.
If you value the Alfaville participation at market price and take into account the ongoing reduction of the share count, price to book is probably even less.
In Brazil, the market mood is extremely low and top tier construction stocks trade around 0.7 to 0.8 book. If I look at those stocks, they seem to form a bottom.
Gafisa is on the right way, operationally, but hasn't achieved top tier profitability yet. The company is even somewhat less leveraged than the average top tier company – quite conservatively managed currently. I'd say that in the market context, 0.5 adjusted book would be appropriate right now. That means a stock price around R$ 4.5 to R$5.
Sentiment: Strong Buy