Monday, 19 September 2016

Mitie (MTO) ... yet another "one-off"

Monday 19th September 2016

Palm to forehead (Thwack!) time for holders of Mitie (MTO, mkt cap £742m) this morning. 

The group has announced a profit warning where: 
"Operating profit for the full year is now expected to be materially below management's previous expectations as a result of a continuation of the pressures experienced in the first half and further one-off costs of organisational change associated with our cost efficiency programmes, which are expected to total up to £10m in the year."
"further one-off costs" ... hmm. Doesn't the fact that they are labelled "further" kind of suggest they may no longer be "one-off"?

In fact, Mitie has a long history of so-called "one-off" or "re-structuring" associated costs. On my maths, these "other items" together with restructuring, acquisition related and exit costs, have cumulatively totaled c. £216m since 2011. Make that c. £226m as of this morning's update. 

However, I fear there will be yet, further, "one-off" costs to come. I continue to believe that Mitie's P&L has been writing profits its balance sheet can't cash. 

Mitie's amounts recoverable on contracts and other trade receivables classed as non-current assets, continued to pile up in the last accounts. Now standing at near £90m from £0 in 2010. 

Mitie amounts recoverable on contracts and other trade receivables classed as non-current assets, £m
Source: Mitie annual reports
Mitie share price
Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog. 

Monday, 25 July 2016

Rocket Internet (RKET GY) ... And So It Goes

Monday 25th July 2016

Groupon (GRPN US, mkt cap $2.2bn) acquired CityDeal Europe GmbH in May 2010. CityDeal was owned and founded by Oliver Samwer, Marc Samwer, and Alexander Samwer; the Samwer brothers. They are also the founders of Rocket Internet (RKET GY, mkt cap €2.9bn). CityDeal was effectively a replica of Groupon, although principally focused on the German market.
We began our international operations in May 2010 with the acquisition of CityDeal Europe GmbH, or CityDeal, which was founded by Oliver Samwer and Marc Samwer. Since the CityDeal acquisition, Messrs. Samwer have served as consultants and been extensively involved in the development and operations of our International segment. 
Source: Groupon 2012 10-K filing 
GRPN's 2012 10-K filing suggests that it paid up to $204 million for CityDeal in May 2010, five months after the business was launched in January 2010. Yes months!
Acquisition‑Related
In May 2010, we acquired CityDeal, a European‑based collective buying power business launched in January 2010 that provided daily deals and online marketing services substantially similar to the Company. As part of the overall consideration paid, we were obligated to issue additional shares of our common stock in December 2010 due to the achievement of financial and performance earn-out targets. We recorded a liability on our consolidated balance sheet as of the original acquisition date for this consideration and subsequently remeasured the liability on a periodic basis until final settlement. As a result of this remeasurement, we recorded a total charge of $204.2 million in acquisition‑related expenses in 2010, which was partially offset by other nominal acquisition‑related items.
Source: Groupon 2012 10-K filing
GRPN has been something of a disappointment. Having floated at around $20 a share in late 2011, its share price is now some 82% lower at $3.76/shr. Whether the CityDeal acquisition created value or destroyed value for GRPN is uncertain. What is more clear cut is the destruction brought about by the other business which the Samwer brothers sold to GRPN; E-Commerce King Limited.

E-Commerce King Limited


According to GRPN's 2012 10-K filing, in January 2011, GRPN acquired 40% of the ordinary share capital of E-Commerce King Limited in exchange for $4.0 Million.
Equity Investment in E-Commerce King Limited
In January 2011, the Company acquired 40.0% of the ordinary shares of E-Commerce King Limited (“E-Commerce”), a company organized under the laws of the British Virgin Islands, in exchange for $4.0 million. The Company entered into the joint venture along with Rocket Asia GmbH & Co. KG (“Rocket Asia”), an entity controlled by former CityDeal shareholders Oliver Samwer, Marc Samwer and Alexander Samwer (the “Samwers”). Rocket Asia acquired 10.0% of the ordinary shares in E-Commerce. E-Commerce subsequently established a wholly-owned foreign enterprise that created a domestic operating company headquartered in Beijing, China (“GaoPeng.com”), which operates a group-buying site offering discounts for products and services to individual consumers and businesses via internet websites and social and interactive media. GaoPeng.com began offering daily deals in March 2011 in Beijing and Shanghai with expansion to other major cities in China to follow.
Source: Groupon 2012 10-K filing
This would suggest a $10 Million valuation for the entire issued ordinary share capital. GRPN's stake in E-Commerce King, was with a joint venture with Rocket Asia GmbH & Co. KG, which was controlled by the Samwer brothers. Rocket Asia acquired 10% of the ordinary share capital in E-Commerce King.

GRPN went on to highlight that around six months later, GRPN acquired a further stake in E-Commerce King, purchasing its increased stake in E-Commerce King from the Samwer brothers', Rocket Asia, for $45.2 Million. GRPN also injected a further $26.7 Million into the E-Commerce business during the same year.
On July 31, 2011, the Company entered into an agreement to purchase additional interests in E-Commerce for a purchase price of $45.2 million from Rocket Asia consisting of 2,908,856 shares of non-voting common stock. See Note 15 “ Related Parties ”. The investment increased the Company's ownership from 40.0% to 49.0%. In addition, the Company made various cash investments for an aggregate amount of $26.7  million in the year ended December 31, 2011. At the same time, the remaining investors made additional proportionate investments that resulted in no change to the Company's ownership percentage in E-Commerce.
Source: Groupon 2012 10-K filing
GRPN's stake rose from 40% to 49%, suggesting that the $45.2 Million purchase valued E-Commerce King at c. $502 Million. That's an impressive 50x increase in valuation in a matter of six months. Although somehow the remaining investors made proportionate investments which resulted in no change to GRPN's ownership percentage in E-Commerce King.

Incidentally, E-Commerce King appears to have racked up losses of $26.5 Million during its first year of trading.
The Company recorded its share of the loss of E-Commerce in the amount of $26.5 million within “Equity-method investment activity, net of tax” in the consolidated statement of operations for the year ended December 31, 2011.
Source: Groupon 2012 10-K filing
A few observations:

  • Incredible uplift in valuations in short order. 
  • As astonishing losses in short order. 
  • The Samwer brothers didn't stick around. 

Skip forward a year


During 2011 and 2012, GRPN made additional cash investments into E-Commerce King of $32.9 Million, increasing its stake to 49.8% along the way. Then in June 2012, E-Commerce King was absorbed by Life Media Limited (F-tuan). In return for GRPN's 49.8% stake in E-Commerce King and a further $25 Million in cash, GRPN received a 19% interest in F-tuan.
In June 2012, Life Media Limited ("F-tuan"), an exempted company incorporated under the laws of the Cayman Islands with operations in China, acquired E-Commerce. In exchange for its 49.8% interest in E-Commerce and an additional $25.0 million of cash consideration, the Company received a 19% interest in F-tuan in the form of common and Series E preferred shares. The Company paid $5.0 million of the cash consideration on June 25, 2012 and the remaining amount was paid on July 2, 2012.
Source: Groupon 2013 10-K filing
However, GRPN's stake in E-Commerce King was seemingly valued at $128.1 Million when it was transferred to the new entity, F-tuan. Then this value was impaired by $50.6 Million to $77.5 Million by December 31, 2012. This was c. 85% lower than the heady times when it bought an additional 9% for $45.2 Million from the Samwer brothers at an implied valuation of c. $502 Million, just 18 months earlier.  
Cost Method Investment in Life Media Limited (F-tuan)
The investment in F-tuan is accounted for using the cost method of accounting because the Company does not have the ability to exercise significant influence. Accordingly, the investment is adjusted only for other-than-temporary declines in fair value, certain distributions and additional investments. The $77.5 million carrying amount of the investment represents the $128.1 million fair value on the date the Company obtained it less the $50.6 million impairment discussed below. The estimated fair value of the investment as of December 31, 2012 was $77.5 million.
Source: Groupon 2013 10-K filing

Skip forward another year


By 2013, GRPN's full investment in F-tuan was written down to ZERO!
Investments in E-Commerce and Life Media (F-Tuan)
In June 2012, Life Media Limited ("F-tuan"), an entity with operations in China, acquired the Company's 49.8% interest in E-Commerce King Limited ("E-Commerce"), an entity with operations in China. In exchange for its interest in E-Commerce and an additional $25.0 million of cash consideration, the Company received a 19.1% interest in F-tuan in the form of common and Series E preferred shares. The Company recognized a non-operating gain of $56.0 million as a result of the transaction, which is included within "Other expense, net" on the consolidated statement of operations for the year ended December 31, 2012. The gain represented the excess of the fair value of the Company's investments in F-tuan over the carrying value of its E-Commerce investment as of the date of the transaction and the $25.0 million of cash consideration.
 
In August 2013, the Company entered into an exchange transaction with F-tuan whereby it received newly issued shares of Series F preferred stock in exchange for all shares of F-tuan common stock previously held by the Company and $8.0 million of cash consideration, which was paid in two installments of $6.5 million and $1.5 million in August and October 2013, respectively. The transaction was recorded at cost. The Company’s investments in F-tuan following this transaction are in the form of Series E and Series F preferred shares. Those preferred shares rank pari passu with certain other classes of F-tuan’s outstanding preferred stock and have an aggregate liquidation preference of $85.5 million. The Company’s voting interest in F-tuan remained 19.1% after the transaction. 
The Company's investments in the Series E and Series F preferred shares of F-tuan are classified as available-for-sale securities because the investee's Memorandum of Association provides for redemption of the preferred shares at the Company's option beginning in October 2017. The Company's investment in the common shares of F-tuan, which were held prior to the August 2013 exchange transaction, was accounted for using the cost method of accounting because the Company did not have the ability to exercise significant influence over the operating and financial policies of the investee. As discussed below, the Company's investments in F-tuan were written down to zero through an other-than-temporary impairment charge as of December 31, 2013, and continue to have an estimated fair value of zero as of December 31, 2014.
Source: Groupon 2014 10-K filing
That's some ride from a $10 Million valuation in January 2011, to an implied $502 Million valuation six months later, and all the way back down to ZERO within a few years.

This is precisely what I expect will happen to almost if not all of Rocket's "proven winners". And for that reason I am short Rocket.

Now ... how about those Kinnevik write downs, huh?
Hint: FT Alphaville Markets Live: Friday, 22nd July, 2016

Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog. 

Tuesday, 17 November 2015

Wirecard (WDI GY) ... GI Retail and a rapidly shrinking market share

Tuesday 17th November 2015

Were one to buy or invest into a business, paying up to say €340 million, or c. 49 x run rate EBITDA, then on that multiple there's a few criteria of investment one may look to tick off. In this list would be a fast growing underlying market. One would also seek the presence of a high barrier(s) to entry or, absent this, at least some sort of first mover advantage. There's no denying that the Indian payments market is growing rapidly.   

Financials of Wirecard's acquisition of GI Retail Group
Source: Wirecard

Data, data, payments data

The World's major central banks generally provide what seems like an endless amount of economic and financial data. The Reserve Bank of India (RBI) is no exception.

Below is the section from the RBI's November 2015 bulletin pertaining to transaction values and volumes by a range of payment and settlement systems. This data is published monthly and goes back many, many years.  

Indian Payment and Settlement Systems data July-September 2015
Source: Reserve Bank of India - November 2015 Bulletin
The data can be found at this link here
Historic data can be found here

The data that is of interest is that found along the Immediate Payment Service and Prepaid Payment Instruments (PPIs) rows. 

This data shows that in September 2015 there were:
  • 17.7 million Immediate Payment Service transactions.
  • 120.7 billion Indian Rupees worth of Immediate Payment Service transactions.
  • 58.0 million Prepaid Payment Instruments (PPIs) based transactions.
  • 40.8 billion Indian Rupees worth of Prepaid Payment Instruments (PPIs) based transactions.

At a rate of c. 71 EUR:INR this equates to:
  • €1.696 billion worth of Immediate Payment Service transactions.
  • €0.573 billion worth of Prepaid Payment Instruments (PPIs) based transactions.
  • €2.269 billion in total.

Commission fees in the payments space typically range from 1% to 1.5%. Indeed, Suvidhaa's commission rate was reportedly c. 1.37% as highlighted in my prior post: Suvidhaa vs. GI Retail.

Further, Dan McCrum's latest feature, Rupee do, from his House of Wirecard series, shows how GI Retail's Hermes i-Tickets business appeared to earn gross commission of c. €1.6 million on total sales of c. €185 million in the year to 31 March 2014. This is a c. 0.9% rate of commission, which is somewhat lower than the typical 1% to 1.5% range. Hermes' commission was also seemingly principally related to airline and railway ticket bookings and less so to money transfers.

However, what Wirecard says is that the GI Retail Group as a whole achieved revenue as follows:
  • FY13/14 (31/03) 1,109.2 million INR or €15.8 million in revenue.
  • FY14/15 (31/03) 2,677.6 million INR or €38.3 million in revenue.

and is projected to achieve
  • FY2015 (31/12) €45 million in revenue.
  • FY2016 (31/12) €75 million in revenue.  

Presumably all this revenue (achieved and projected) is largely related to payments and money remittance. Indeed Wirecard's CEO, Markus Braun says as much:
"Great Indian (GI) Retail Group has been at the forefront of India's dynamic and early-stage e-commerce and money remittance market for many years. Our investment into one of the region's leading payment groups secures us a strong position in one of the world's most rapidly growing electronic payment markets."
Hence, if commission rates are in the range of 1% to 1.5%, then if we assume GI Retail earns mid-way in this range, receiving 1.25% of total transaction value, then this would imply the following:

  • FY13/14 (31/03) 1,109.2 million INR or €15.8 million in revenue = c. 88.736 billion INR or €1.264 billion in transaction value.
  • FY14/15 (31/03) 2,677.6 million INR or €38.3 million in revenue = c. 214.208 billion INR or €3.064 billion in transaction value.
  • FY2015 (31/12) €45 million in revenue = c. €3.6 billion in transaction value. 
  • FY2016 (31/12) €75 million in revenue = c. €6.0 billion in transaction value. 

The data goes back a few years

As mentioned above, the RBI Payment and Settlement Systems data goes back some time. Well it goes back to 2013 and a bit before that.

Here is the Payment and Settlement Systems data from the Reserve Bank of India's May 2014 bulletin:
Indian Payment and Settlement data January-March 2014
Source: Reserve Bank of India - May 2014 Bulletin
This shows that in the twelve months to March 2014 there were:
  • 15.3 million Immediate Payment Service transactions.
  • 95.8 billion Indian Rupees worth of Immediate Payment Service transactions.
  • 144.3 million Prepaid Payment Instruments (PPIs) based transactions.
  • 79.05 billion Indian Rupees worth of Prepaid Payment Instruments (PPIs) based transactions.
At a rate of c. 71 EUR:INR this equates to:
  • €1.349 billion worth of Immediate Payment Service transactions.
  • €1.113 billion worth of Prepaid Payment Instruments (PPIs) based transactions.
  • €2.462 billion in total.
As highlighted above, Wirecard's claims for GI Retail's FY13/14 (31/03) revenue should imply it was related to c. €1.264 billion in transaction value.

That would suggest that GI Retail had c. 51.3% share of the combined Immediate Payment Service and Prepaid Payment Instruments transaction business that was up for grabs in the twelve months to March 2014.

That seems quite a lot.

Skip forward a year and here is the Payment and Settlement Systems data from the Reserve Bank of India's May 2015 bulletin:

Indian Payment and Settlement data January-March 2015
Source: Reserve Bank of India - May 2015 Bulletin

This shows that in the twelve months to March 2015 there were:
  • 78.4 million Immediate Payment Service transactions.
  • 581.9 billion Indian Rupees worth of Immediate Payment Service transactions.
  • 314.5 million Prepaid Payment Instruments (PPIs) based transactions.
  • 213.4 billion Indian Rupees worth of Prepaid Payment Instruments (PPIs) based transactions.
At a rate of c. 71 EUR:INR this equates to:
  • €8.195 billion worth of Immediate Payment Service transactions.
  • €3.005 billion worth of Prepaid Payment Instruments (PPIs) based transactions.
  • €11.2 billion in total.
As highlighted above, Wirecard's claims for GI Retail's FY14/15 (31/03) revenue should imply it was related to c. €3.064 billion in transaction value.

That would suggest that GI Retail had c. 27.4% share of the combined Immediate Payment Service and Prepaid Payment Instruments transaction business that was up for grabs in the twelve months to March 2015.

That seems quite a lot but is down from the c. 51.3% share it appeared to have a year earlier.

Now, bringing this up to where Wirecard reckons GI Retail will finish the year shows as follows.

The RBI data indicates that transaction value related to Immediate Payment Service and Prepaid Payment Instruments totaled €16.705 billion during the nine months to September 2015.

Transaction value has been increasing by an average €123 million per month during 2015. On that basis, total transaction value related to Immediate Payment Service and Prepaid Payment Instruments would be expected to total €24.266 billion* during the twelve months to December 2015.

Now Wirecard reckons GI Retail's FY2015 (31/12) revenue will be c. €45 million, which should imply it will relate to c. €3.6 billion in transaction value.

That would suggest that GI Retail had c. 14.8% share of the combined Immediate Payment Service and Prepaid Payment Instruments transaction business up for grabs in the twelve months to December 2015.

That still seems high but is down from the c. 27.4% implied to March 2015 and the c. 51.3% implied to March 2014.  

*Total transaction value in the nine months to September 2015 = €16.705 billion.
Total transaction value in September 2015 = €2.275 billion.
On average total transaction value has increased by €123 million each month in the first nine months of 2015. 
Hence, expected total 2015 transaction value = €16.705 billion (9 months to September) + €2.275 billion + €123 million (September + average increase in the month) + €2.275 billion + 2x €123 million (September + 2 x average increase in the month) + €2.275 billion + 3x €123 million (September + 3 x average increase in the month) = €24.266 billion.

Incidentally, as a corollary, if Wirecard expects GI Retail's revenue to rise to €75 million in 2016, then for GI Retail to maintain (or grow) its implied 2015 market share, then market growth needs to slow to (or fall below) 67%. This is still strong growth but would be a sharp slowdown from 214% growth in 2015 and 351% growth in 2014.

And another thing

As Dan McCrum amusingly^ highlights in his latest feature on Wirecard, Hermes is signed up with India's Yes Bank to provide money transfer services. Now you might think that on the basis of GI Retail's implied market share of c. 51.3% from a few years back, that Hermes/GI Retail was either the only (or one of very few) to be signed up with Yes Bank. You'd be wrong to think that.
^Look for the section on an unusual headline. 

Here is Yes Bank's latest list of Money-Business Correspondents:

Yes Bank's list of Money-Business Correspondents
Source: Yes Bank November 2015
And here is Yes Bank's list of Money- Business Correspondents from August 2013, around the time it would seem (on the basis of above) that Hermes/GI Retail had c. 51.3% of the combined Immediate Payment Service and Prepaid Payment Instruments market.

It was clearly slim pickings for the other twelve members signed up with Yes Bank. Of course Yes Bank is only one of many retail banks in India.

Yes Bank's list of Money-Business Correspondents
Source: Wayback Machine - Yes Bank August 2013 

Just one more thing

Wirecard highlights that:
"The National Payments Corporation of India (NPCI) ranks GI Technology as number one bank's remitter among 123 members as of 6th October 2015."
And here is the NPCI's website showing GI Technology with c. 3.7 million subscribed users (1 lakh = 100,000).
Prepaid Payments Instrument Issuer subscribed users
Source: National Payments Corporation of India
Strangely the only other subscribed user data is provided for ITZ Cash Card. One can see why one may reckon that Wirecard views GI Technology as being the number one bank's remitter.

But this may not have always been the case.

According to the NPCI, in December 2014, GI Technology had c. 1.4 million subscribed users while Oxigen Services had 50% more or c. 2.1 million subscribed users.
Prepaid Payments Instrument Issuer subscribed users
Source: Wayback Machine - National Payments Corporation of India December 2014
And prior to this, in May 2014, GI Technology had c. 0.5 million subscribed users while Oxigen Services had c. 0.9 million subscribed users. These numbers are indeed odd, when at the same time, going on Wirecard's claims for GI Retail revenue and the RBI data, it would appear that GI Retail had c. 51.3% market share.

And finally

Here is the iCashCard website, "India's number one domestic (Immediate Payment Service - IMPS) remittance instrument":

iCashCard website and click option for Agent Login
Source: www.icashcard.in
If you click on the "Agent Login" option (highlighted above) it takes you here:

iCashCard Agent Login site
Source: http://agent.icashcard.in/login
And if you click on the "Want to become retailer click here to apply provide us details. We will reach you shortly" option, it takes you here:

GetMyTrip application/enquiry form
Source: www.getmytrip.com
Why does an application to become a retailer for the iCashCard payments business ("India's number one domestic remittance instrument") take you to the Hermes' travel agency site, Get My Trip? This is altogether very odd.

I increased my short in Wirecard.

Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog.

Friday, 6 November 2015

Atkins (ATK LN) ... as night follows day

Friday 6th November 2015

Coming up to two years ago I sold short in Weir Group (WEIR, mkt cap £2.4bn), at 2,094p/shr.
Demand driven short

I quickly covered the short about a month or so later at around 2,300p/shr. I closed in the midst of a sharp run up in Weir's price, driven by spurious bid speculation and a short squeeze; short interest at the time was 12%. The market then was also fairly unforgiving for shorts, still being juiced by QE, statements of "whatever it takes" and all that.

Weir's shares peaked at 2,848p and loitered above 2,500p through to September 2014. 

It's a pity I didn't review my bearish view on Weir in H2 2014. The shares have since collapsed to 1,136p.

Weir share price
Source: Bloomberg
The rationale behind my short was pretty straightforward. For months, Weir's customers had been broadcasting an enormous contraction in their collective capex plans in the years ahead. Hence, it was obvious to me, that as night follows day, that Weir's revenue and margins would come under pressure following that contraction in demand from its principal customers. And yet for some reason, consensus earnings expectations remained absurdly optimistic.   

In early 2014, I'd calculated that Weir's top 13 customers* accounted for 32% of its revenue and from those customers' capex guidance, they were about to cut their combined annual capex by 14% over the next three years. At the same time, consensus* estimates projected Weir's revenue to grow 19% over the same period. Go figure!
*data from Bloomberg   

Weir consensus revenue growth projections
from January 2014 as compared to current consensus
Source: Bloomberg
Weir consensus EBITDA margin projections
from January 2014 as compared to current consensus
Source: Bloomberg

That was then 

Now I reckon the same bearish argument could be made for Atkins (ATK, mkt cap £1.4bn), the design, engineering and project management consultancy business.

According to Bloomberg estimates (BBE), Atkin's top 12 quoted customers^ account for 16% of its revenue. Further, BBE suggest that these customers are set to cut their combined annual capex each year by 15% in 2015, 4% in 2016 and a further 2% in 2017. This is a total capex cut of 21% through to 2017 from 2014 levels.

By comparison, BBE forecasts that Atkins is set to grow its revenues by 5%, 3% and 4% in 2016, 2017 and 2018 respectively (Atkins has a March year end). This is total growth of 13% through to 2018 (March year end) from 2015 levels.

Further, consensus expects Atkin's EBITDA margin to rapidly increase from 7.7% in 2014, to 9.4% by 2018.

I find all this very unlikely. So I sold short a few Atkins.

^Bloomberg estimate of Atkin's revenue by customer - Airbus (4.3%), Apache (2.0%), Statoil (2.0%), CNOOC (1.6%), Chevron (1.4%), ENI (1.3%), Boeing (0.9%), Royal Dutch (0.9%), Rolls Royce (0.7%), BP (0.6%), National Grid (0.4%), Alstom (0.2%)

Atkins consensus revenue growth and EBITDA margin forecasts
as compared to consensus capex plans by top 12^ (see above) quoted customers
Source: Bloomberg

Incidentally, Atkins trades on a forward P/E of 12.5x and a forward EV/EBITDA rating of 6.9x when as one can see, historically the shares have traded somewhat lower.

Atkins forward P/E and EV/EBITDA rating
Source: Bloomberg
Atkins share price
Source: Bloomberg

And another thing

As night follows day ... I found the following charts reasonably compelling.

Atkins share price as compared to Apache Corp (2.0% of ATK revenue*)
Source: Bloomberg, *Bloomberg SPLC 
Atkins share price as compared to Statoil (2.0% of ATK revenue*)
Source: Bloomberg, *Bloomberg SPLC
Atkins share price as compared to Chevron (1.4% of ATK revenue*)
Source: Bloomberg, *Bloomberg SPLC
Atkins share price as compared to ENI (1.3% of ATK revenue*)
Source: Bloomberg, *Bloomberg SPLC
Atkins share price as compared to Rolls Royce (0.7% of revenue*)
Source: Bloomberg, *Bloomberg SPLC
I'm short Atkins.

Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog.