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ADES has “unsustainably low valuation” says Numis, as it initiates at 'buy'

The broker's analysts said the oil services firm has the second largest jack-up rig fleet in the Middle East and North Africa, which is “perfectly suited” for the needs of leading oil companies

Jack-up rig
They noted that ADES' increased day rates for their rigs could provide more upside to their forecasts

ADES International Holding PLC (LON:ADES) has an “unsustainably low valuation” and is the least expensive oil services firm versus its global peers, according to analysts at Numis Securities.

In a note initiating coverage on the stock with a ‘buy’ rating and US$24.3 price target, the broker said the main market-listed firm is the second-largest jack-up rig owner in the Middle East and North Africa (MENA) region, with its fleet “perfectly suited” for the needs of leading oil companies.

READ: ADES International lands new business in Egypt and extends a contract in Algeria

The analysts pointed out that ADES has “high revenue visibility” with 95% of their 2019 earnings forecast already covered, as well as 76% of 2020, and 56% for 2021.

They said they see “more upside than downside risks over the next few years”, particularly if day rates for the jack-up rigs increase.

In mid-morning trading on Tuesday, ADES shares were steady at US$13.7, a 43.6% discount to Numis’ target price.

Quick facts: ADES International Holding PLC

Price: 12 USD

Market: LSE
Market Cap: $521.09 m


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