Working on FPSO's Floating Production, Storage and Offloading as well as things like the floating windmills at Provence Grand Large:
SECTOR: [PASS] SBM is neither a technology? nor financial Company, and therefore this methodology is applicable.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. SBM's sales of €4 956 million, based on 2022 sales, pass this test. Sales have increased considerably lately.
CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. SBM's current ratio $9 071m/$3 603m of 2,5 passes the test.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt is €7 371 million, while the net current assets are €5 468 million. SBM fails this test.
LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. SBM's EPS were negative in 2011, 2012 and 2017, therefore, SBM failed this test. Now in 2023 earnings have increased.
Earnings Yield: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. SBM's E/P of 16% (using a mix of the average of 3 years and last year's Earnings) passes this test.
Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. SBM has a Graham number of √(15 x €2,2 EPS x 1,5 x €17 Book Value) = €29
Dividend= €1/€12,6 = 8%
Conclusion Oktober 2022: Seems like a buy with a margin of safety at EUR 13,50 today.
Conclusion January 2024: Seems like a buy today at EUR 12,63
Note: HAL Trust owns 23% of SBM Offshore which is EUR 0,5b where HAL has a market cap of around EUR 10b. HAL's shares are trading at EUR 114 with a Net Asset Value per share of around EUR 151 (which is low considering SBM's value is "mark-to-market" which seems low.
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