SMHI - Seacor Marine: Deepening OSV Deficit And Improved Financials Rating Upgrade To Buy

2024-03-11 14:36:30 ET

Summary

• SEACOR Marine offers value for investors seeking offshore industry exposure with strong financial results and improved liquidity.
• The OSV market is in the expansion phase with constrained supply, rising demand, and geopolitical uncertainty. OSV demand is expected to grow by 13% over the next three years.
• Operating revenue increased to $279 million in FY23, 28% higher than in FY22. SMHI delivered $35.5 million operating income in 2023. SMHI is financially sound, with a healthy capital structure.
• SMHI trades at 2.1 EV/Sales, 7.9 E/EBITDA, and 0.9 P/TBV. It is the cheapest stock in its peer group based on EV/Sales and P/TBV. An exception is EV/EBITDA, where SMHI ranks second next to TDW.
• When the OSV market gets stronger, more investors become interested in the industry. Those who seek relative value, i.e., stock trading at lower multiples, may pick SMHI.

Introduction

SEACOR Marine ( SMHI ) offers value at a reasonable price for investors seeking offshore industry exposure. The company has 58 vessels with an average age of 9.4 years. The company’s last financial report delivered strong results: higher revenues due to a strong OSV market and robust operating income. SMHI maintains a prudent capital structure and has significantly improved its liquidity over the last few quarters....

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