I bought into these yesterday and they are rising steadily. Main market listing with results in August and the market seems to like them. They are in the rapid growth oil and gas support area.

sp was whacked this morning when it was reported that Candover had placed its entire 14% holding .... however, on the basis that the shares were actually placed, implying no overhang, and the recent figures were excellent, i think the shares are worth a dabble ...... risk is that the markets generally will tumble, indiscriminately taking all and sundry south

Presumably Candover cant see much upside for the time being.

not necessarily so ...... could it not be that Candover needed to take some profits to enhance their liquidity or something?

Well, a minor blip & then the steady climb again.
Am unable to find a broker target for this at the moment, but anyone any idea how much further this can go before it becomes over valued?

LONDON (Thomson Financial) - "Oil services group Wellstream Holdings Plc. said it has won a four-year framework agreement from Petroleo Brasileiro SA worth over 600 million pounds.

The contract covers the procurement of standard 2.5 inch to 9.5 inch flowlines and risers between 2009 and 2012, the company said."

.... lifted from across road

Wellstream Holdings PLC

FORECASTS
2008 2009

Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Blue Oar Securities
06-03-09 BUY 76.30 52.90 12.00 91.70 64.50 13.20

Evolution Securities Ltd
02-03-09 BUY 73.10 50.70 10.00 86.40 58.30 12.00

Arden Partners
02-03-09 BUY 78.90 54.40 9.30 91.80 62.60 12.50

ABN AMRO
10-02-09 HOLD 75.29 51.29 10.26 84.67 57.27 11.45

Seymour Pierce [R]
16-05-08 BUY 70.70 50.40 10.00

2008 2009

Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p
)
Consensus 76.71 52.10 10.42 85.52 59.22 12.00

1 Month Change 0.04 0.03 0.01 0.02 0.06 0.00
3 Month Change -2.60 -2.24 0.04 -6.05 -3.95 -0.17


GROWTH
2007 (A) 2008 (E) 2009 (E)

Norm. EPS 0.73% 50.89% 13.67%
DPS % % 15.16%

INVESTMENT RATIOS

2007 (A) 2008 (E) 2009 (E)

EBITDA 55.52m 89.46m 103.27m

EBIT 50.25m m m

Dividend Yield 0.00% 2.71% 3.12%

Dividend Cover x 5.00x 4.94x

PER 11.15x 7.39x 6.50x

PEG 15.25f 0.14f 0.48f

Net Asset Value PS 63.06p 144.23p 197.68p

Good to see Robbie Burns (naked trader) long on this one. From his web site...

"After taking losses initially on Wellstream (WSM) I bought back at just over 400 and managed to take 10% as it went back to 450. However I won't claim credit for this as it was between updates.

But I did buy a further lot after they tumbled again which I still have, 1,000 shares at 365.4. Target 440 stop 340. With its volatility my previous mistake was to not to treat it as a more short-term trade. So this is what this will probably be"! .......... ENDS.

Dont always agree with him but I think hes called this one right although his trading length may be a little longer now that the markets are rallying

Wellstream downgraded to reduce from buy at Arden.

PFC and LAM both performing well ....... WSM clearly not!

Wellstream's first-half results indicate a profit warning, says RBS analyst Phil Lindsay.
'We see a potential downgrade of 23-27% to our forecasts and also to consensus. Project delays are reducing backlog and impacting efficiency at its production plants. Current market conditions could persist well into 2010.'
RBS keeps its hold rating but sees the shares under pressure in the short-term.

UBS note issued this morning:
"Wellstreams 1H results were a profit warning 1H results announced on 20 August were in our view a profit warning, citing weak production, low margin product mix, lower prices, and lower utilisation. Brazilian demand in our view remains strong in the medium term but with less activity in the short term, particularly in the Santos basin. Although the shares have under-performed since results off 6% vs. the market we believe there is further to go. If the company is a target, acquirers and value are hard to identify

As we highlighted in our February initiation, Wellstream is a small independent company with no controlling shareholder, currently subject to a cyclical down-swing in demand, and additionally about to make a major investment in installation capacity, a strategic change. We note the COO sold half of his shares on 29 September. We believe none of its direct competitors is a likely buyer.

Investment in installation capacity highlights strategic challenge. Wellstream has been seeking to control installation capacity since its IPO, initially through the Seastream JV and now with a proposed JV for a new build high capacity vessel to a Wellstream-approved design. This change to a manufacture + install strategy means more capital employed, more operating risk, and most likely greater volatility which we doubt is priced in.

Valuation: Downgrade to Sell, raise 12-month price target to 520p
We base our valuation on a mix of DCF and replacement cost. At our price target the stock would trade at 8.9x 2010 EV/EBIT and 11.4x 2010 P/E, roughly a 20% discount to the sectors current multiples. We make no changes to our EPS estimates."

the chart's pretty ugly too with both 25 and 50 dma easily breached ..... 500/510 where sp hits 200 dma may be a good place to look for a bounce

From Citigroup 10-12-09:
"Summary We downgrade Wellstream to Sell from Hold and cut our target price to 4.35 from 5.75. Uncertain demand outside Brazil exposes 2010 earnings. The long-term margin may be reduced by installation a critical but margin-dilutive service required by clients. The stock looks expensive in our view, trading at 13.4 times our 2011e earnings, a 17% premium to the sector.
2010 Earnings Exposed The weak backlog and order outlook for the Newcastle plant targeting demand outside Brazil should hurt 2010 earnings. We estimate Newcastle end-2009 backlog at 30m, just 28% of its 2010e sales. We cut our 2010 EPS estimates by 31% mostly because of Newcastle uncertainty. This risk is known but does not look priced in, with the stock recovering after the trading update (17 Nov), and the market seemingly looking beyond 2010. We look beyond 2010 too, and see margin dilution."

Faint rumours of a t/o approach yesterday.

good call by Citigroup!
volume today is usefully 2x norm, though whether there is actually a bid in the offing remains to be seen
no, i wasn't remotely smart enough to buy below 540, but am more than happy to have bought at 576, well into the recovery phase

Allegedly Prysmian is interested (formerly Pirelli Cables).
To be fair to Citigroup, they had not factored in the t/o element, which is the reason for the current level of the sp. If the rumour is solidly quashed, I would expect the sp to fall to it's normal trading range.

Broker note from Evolution today:
"We have long believed that Wellstream (WSM) is a prime M&A target for subsea players looking for high tech flexible pipe technology. Yesterday the CEO of Prysmian (MCap. 2.7bn), an Italian maker of high tech umbilicals/armoured cables for the energy market is reported to have said that Wellstream would be a beautiful acquisition. Although subsequently denied, Prysmian does have aspirations in the SURF flex pipe market which is a logical progression from its steel and thermoplastic umbilicals indeed Prysmian already has a 4 year frame agreement from Petrobras for flexibles, but no real capability of delivering before 2011".

JP Morgan broker note:
"Yesterday evening (after market close) Technip announced that it has won a major contract to supply flexible pipe for the Tupi field in the Brazilian pre-salt. The contract includes the engineering, procurement, manufacturing and supply of 90km of risers and flowlines for water injection, oil production, gas lift and carbon dioxide re-injection. Delivery of the pipes is scheduled to start towards the end of 2010 and finish at the end of 2012.

This is negative news for Wellstream, which has been competing with Technip for the supply of these in-field pipes, and we believe while the long-term opportunity in Brazil is substantial this will no doubt increase the markets perception that Technips product is technically superior. We highlight the fact that Wellstream was awarded the contract to supply pipe for all the extended well test (EWT) work last year, and we do not believe this award to Technip was made on technical grounds.

The Tupi pilot scheme will utilise a single Floating Production Storage & Offloading (FPSO) vessel (on a long term lease with Modec) and industry reports point to a total of 16 wells (including injectors). Petrobras was widely anticipated to use flexible risers and flowlines for the Tupi pilot scheme and Technips announcement this morning that it has agreed to purchase a second Brazilian-flagged flexlay vessel (with its partner DOF) hints at continued commitment by Petrobras for flexibles.

Wellstream's average normalised kilometre pipe price of c. 800k (920k) in 2009, indicates a contract value of c. 80m for Technip. However the range of per kilometre prices varies tremendously based on the diameter and technical specification of the pipe, and we believe the total value to Technip is substantially higher than this.

This pilot scheme is the first phase of the Tupi development, and later phases will incorporate additional floating production units (likely to be FPSOs) and demand for a much larger quantity of flexible pipe. We believe longer term pipe supply is likely to be split between Technip and Wellstream (and eventually possibly NKT Flexibles and Prysmian).
Technip's installation capability, which we generally see as an important competitive advantage, is much less relevant in Brazil as Petrobras always purchases pipe independently from installation contracts, which are managed internally (it is the only oil company that does this).

In the longer term we remain confident that the pre-salt development will incorporate both flexible and rigid risers - a subject discussed in detail in our recent report Momentum building for selection of rigid risers for Iara and Guara - flowlines to go flexible.

Profit delay is a big hurdle for WSM.

StockMarketWire.com
"Oil services group Wellstream Holdings confirms it has received a number of preliminary approaches regarding a possible offer.

The company's statement follows movement in its share price.

It says there can be no certainty that an acceptable offer will be made. A further announcement will be made in due course. "

wow! I wish I'd stayed in this one!