Northbridge’s results for FY20 were in line with market expectations, showing both revenues and adj. PBT higher y-o-y despite the impact of the pandemic on trading. Of greater significance was news of a strategic review of the business, with the Board examining the disposal of Tasman, the Group’s oilfield services unit.
The FY20 results showed positive trading momentum and cash generation remained strong with net debt falling to give a net debt/EBITDA of 0.9x. With the Group well advanced in negotiations with its banks to provide greater headroom on its facility, we think that the loan notes’ early redemption is increasingly likely.
Crestchic has several opportunities for further growth, and with focused investment we expect it to continue its strong progress. Based on the current valuation, Crestchic on its own is trading at a marked discount to its hire service peers. We therefore anticipate a re-rating in the light of the strategic review.
In FY20, Crestchic delivered EBITDA of £6m. At the current EV, that suggests Crestchic would be trading on a historic EV/EBITDA of 5.4x, representing a significant discount to its peers that should narrow materially as these plans are executed.
The proposed disposal of Tasman, coupled with Crestchic receiving the funding it requires to deliver on the opportunities open to it, points to an exciting future.
