Canaccord anticipates more favourable winds for Lamprell

The Canadian broker conceded that Lamprell's underlying earnings continued to be negative, order intake was disappointing year-to-date and even stated that attacks on Saudi infrastructure seemed to have done little to "jolt the oil market out of the doldrums".

However, analyst Alex Brooks pointed out how interim revenues of $106m were a 35% improvement on the previous half and said guidance for the full-year implied "a rough doubling of revenue" in the second half.

"The outlook going into 2020 is noticeably improving," Brooks added. "Primarily this is coming from two markets that five years ago were tiny for Lamprell: Saudi LTA and offshore wind."

In the case of wind, Brooks highlighted the results of the third round of the UK's contracts-for-difference (CfD 3) auctions for offshore wind, which yielded a price below those now available on the open market.

"We understand that one of the winners in the CfD 3 auction intends to sell roughly half of its electricity on a merchant basis. This is transformative, as it means the offshore wind market can be developed in the absence of formal government approvals," the analyst said.

Brooks's estimates called for Lamprell's total full-year sales to roughly treble between 2018 and 2021, from $234.1m to $700.0m.

Canaccord also made a number of minor changes to its forecasts on Lamprell to account for the integration of IFRS16, the reduction in 2020 EBITDA to around break-even and the slight delay to development of its Saudi yard.

Despite the resulting cut to Lamprell's price target, Canaccord retained its 'buy' rating on the company's shares.