Saipem stock today rises by 0.24% to € 1.023 for a capitalization of 1.03 billion, while the Ftse Mib gains 1.86%. The group yesterday published the preliminary results for 2021 (the new plan will be presented on March 15) which indicate an adjusted EBITDA of -1.192 billion euros and -0.901 billion in relation to the fourth quarter due to “the increase in difficulties. on some specific offshore wind and onshore E&C orders that were highlighted with the backlog review exercise “, explains the company controlled by Eni (30.5%) and by Cdp (12.4%) following the board meeting and after the group launched its third profit warning in January, warning that it will have to carry out a capital increase.
It was above all the difficulties encountered for specific orders in offshore wind and E&C (Engineering & Construction) on shore and emerged in the revision of the orders that caused the sharp worsening of Saipem’s accounts in 2021. Today Equita Sim appreciates that the revision of the backlog does not led to the identification of further losses. The guidelines of the 2022-25 plan are essentially in line with the rumors that have emerged in recent days and point to a review of offshore wind.
At this point, the analysts of the Milanese SIM reduce the target price from 1.2 to 1 euro in anticipation of a capital strengthening from 1.5 billion, an increase compared to the 1.2 billion previously assumed by Equita, “which also reflects greater uncertainty on the market after the war events “. Analysts refer to Russia’s ongoing invasion of Ukraine. One of the fears of the markets is that the sanctions announced by Western countries against Moscow may also have an effect on the partners of Russian companies. Therefore, on the one hand, Saipem benefits from the sharp rise in oil prices, and on the other hand it has to deal with Moscow.
For example, Saipem signed an agreement with Technip France SA and NIPIgaspererabotka in August 2019 to participate in the joint venture for the construction of the gas project, Arctic Lng2. In this case, the Italian group has acquired a share of works for a value of approximately 2.2 billion euros. Shortly before, Saipem had signed a preliminary agreement with JSC GazpromNeft Moscow Refinery and an EOC contract with Infrastructure Development and Construction for 500 million euros. The giant Gazprom is among the first targets of US and EU sanctions.
As for capital strengthening, Equita believes that it is more likely to occur within a broader range, between 1.5-2.0 billion since it would reduce the ratio of net debt to EBITDA to around 1.5-1. times in the two-year period 2023-2024, a level that analysts consider more “reasonable for Saipem’s business”. Recent press rumors point to a strengthening within that range, some newspapers believe even a higher level is more likely. On March 15, with the new plan, what the company foresees.
The net financial position of the group shows an improvement at the end of 2021 to 1.5 billion euros compared to 1.7 billion euros at the end of September 2021. The focus is mainly on liquidity which at the end of 2021 was 2.3 billion of euro, of which around 700 million are available with the remainder tied mainly to projects in joint ventures. On 5 April Saipem must repay a subordinated bond for 500 million euros. (All rights reserved)
