But a price rise of 10% in one day on no news and little volume means that the share price is prone to volatility for the foreseeable future at least.
That’s fine as I’m of the opinion that Gulf Marine is still undervalued and my target of 140p is conservative enough to provide for a reasonable expectation of returns given the market value vs the intrinsic value of Gulf Marine.
In plain English: expect price chop in both directions before a rise in market value towards the price target.
Gulf Marine’s next public announcement is scheduled for 24 March when they’ll publish preliminary results for the period ended 31 December 2014.
As a comparison interim results for the six months ended 30 June 2014 included:
Gulf Marine Balance Sheet
It will be interesting to see what Gulf Marine announce as to what they will do with the cash from the IPO which has strengthened their balance sheet.
As noted in my previous post GMS have already started to update and increase their fleet to meet the demand of their low cost offering to customers.
What I’ll be looking for specifically is an increase in cash as a result of all of the new contracts GMS have announced over the last six months. All else being equal a revenue increase leading straight to the bottom line will give shareholders confidence to hold stock.
I’ll also be looking to see whether bank borrowings have decreased and at least some cash has been spent reducing indebtedness. To see why greater control over debt is important here is note 15 to the accounts:
Clearly management think finances are under control otherwise it would not have declared a dividend of 0.41 pence but I will look for a reduction in indebtedness nonetheless. Circa $50 million would be nice.
Gulf Marine Income Statement
After a quick review of Gulf Marine’s income statement one would hope that EPS would have increased.
The question is will Gulf Marine be able to pull off all of these items on my bucket list?
A dilution of shareholder value would certainly be a bad sign, especially if it has not been accompanied by revenues and earnings increases.
I remain in wait until 24 March.