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Falcon Energy offer for CH Offshore not unfair
Liu Jinshu, Lead Analyst, Voyage Research has released a research report on Falcon Energy Group Limited’s offer for CH Offshore Limited. In this report, the offer that Falcon Energy made for CH Offshore is analysed. The Independent Directors had previously recommended to shareholders to reject this offer. The Independent Financial Adviser had also advise that the offer is not fair and not reasonable.
The Voyage Research report instead suggests that the offer is fair. The offer is made at 11.4 times CH Offshore’s trailing PE. It also represents an 81.4% premium over its 5 year average PE of 6.7 times. This compares to an average trailing PE of 6.5 times for its stock market peers. The average price-to-book ratio is 0.84 for CH Offshore’s stock market peers. This compares to offer price-to-book ratio of 1.16 based on financials up to Dec 2014.
The report also states that the acquisition makes sense as a large combined fleet with Falcon Energy would increase earnings stability. This is because vessel downtime can be better managed with a larger fleet due to better ability to rotate. CH Offshore has had falling revenues from FY2010 to FY2014.
GET TO THE POINT : CH Offshore is currently trading just above the offer price of 49.5 cents. With the outlook of falling oil prices and the lack of Independent Director and Independent Financial Adviser support of the offer, taking up the offer might just be the best way of locking in value for the shareholders.
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The post Falcon Energy offer for CH Offshore not unfair appeared first on Asean Equities Review.
