Greka Drilling's shares plunged over 20 per cent in the week or so prior to these figures - as an unconventional gas driller in China, the share price has traditionally been volatile. But, with these half-year results having demonstrated that Greka is now well set to pursue third-party deals beyond its existing arrangement with sister company Green Dragon Gas, that de-rating looks overdone.
Revenue grew robustly in the period after Greka drilled 57,997 metres - up 119 per cent year on year - and gross profit more than doubled to $6.27m (£3.97m). Perhaps more importantly, though, Greka completed the construction of its Shanxi Base Camp during the first half, and has taken delivery of all of the new rigs under order - thereby increasing its fleet from seven to 32 rigs. The company’s internal training programme continues apace, too, and chairman and chief executive Randeep Grewal is confident of “signing third-party contracts in the latter part of this year”.
Broker Macquarie Equities estimates fair value, on a discounted cashflow basis, at 41p a share and expects full-year pre-tax profit of $8.86m, giving EPS of 1.17¢ (2011: £4.62m and 0.65¢), rising to 5.09¢ in 2013.
| GREKA DRILLING (GDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 18.5p | MARKET VALUE: | £79.8m | |
| TOUCH: | 17.5-19.5p | 12-MONTH HIGH: | 43p | LOW: 17.8p |
| DIVIDEND YIELD: | nil | PE RATIO: | 42 | |
| NET ASSET VALUE: | 18¢ | NET DEBT: | 26% | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 17.1 | 1.02 | 0.2 | nil |
| 2012 | 28.3 | 1.36 | 0.2 | nil |
| % change | +65 | +33 | - | - |
£1 = $1.58 | ||||
