Lamprell - Should I buy?

Lamprell does not satisfy my criterion of adjusted net current asset value per share being less than share price (see Newsletter 14.12.16). I estimate the NCAV per share at 58p (after marking down BS inventories and receivables) whereas the current share price is 94.75p.

The business prospects in the medium term are not too bad, and so it gets a pass on that.

Management quality is a major blind spot because they are all so new.

On stability: It has reasonable operating stability but is vulnerable to downturns in activity in the oil and gas industry. It may also be vulnerable to emphasis on the LeTourneau jackup rig design, now owned by a competing fabricator.

There is also some vulnerability arising from large proportions of annual revenue coming from a small number of customers.

It is financially stable, with plenty of cash.

What might cause a re-valuation?
•A change in industry conditions? If there is a revival in oil and gas exploration Lamprell might gain more pricing power as one of the few……..To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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