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Read on to see an article posted on the Deep Value Shares blog on 29 October 2016:

Lamprell – is it a net current asset value investment?

I’m at a very early stage in analysing this company, but it shows some promise. At the end of June it had US$138m of cash and a (crude) net current asset value of US$346m.  Its current market capitalisation is only £250m.

It also had over US$90m in “buildings and infrastructure”.

What it does

Lamprell (LSE:LAM), while listed on the London Stock Exchange and dominated by westerners, is based in the United Arab Emirates (“UAE”). It fabricates complex structures such as oil and gas platforms.  A particular specialty seems to be a drilling platform on four legs, each of which can be pulled up so that it floats and can then be towed to a different location by tugs, called “jackup rigs”.

It also fabricates and engineers for the renewable energy industry, and makes multi-purpose liftboats (self-propelled, self-elevating vessel with a relatively large open deck capable of carrying equipment and supplies in support of various offshore mineral exploration and production or offshore construction activities), land rigs, and rig refurbishment projects.

Employing over 9,000 people, with an emphasis on highly skilled engineers, it is based at four fabrication yards located in in the UAE, and facilities in Saudi Arabia.   The capability, reputation and knowledge of the team, together with ownership of fabrication space and deep water quayside berths, covering over 1,000,000m2 with 2km of quayside, might give some competitive advantage in a complex area of engineering.

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Approximate price levels for the commodities BHP sells

Recent suffering

Obviously the low oil price of recent years has curbed growth and profits this sort of industry, as oil producers cut back on capital spending. Lamprell reported losses of $4.4m in the last half year to June. But here is the longer, generally positive,  profit after tx history:

2015: $65m
2014: $118m
2013: $36m
2012: loss $110m
2011: $63m
2010: $65m
2009: $28m

I’ll enjoy looking into this one in more detail over the next two weeks.

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Read more sample articles:

1 Nov 2016 - Some thoughts on company management

31 Oct 2016 - Words of wisdom for investors

28 Oct 2016 - Searching for a new net current asset value investment

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