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Dolfines

CR
Bloomberg   ALDOL FP
Engineering-Heavy Constr.  /  France  Web Site   |   Investors Relation
Capital increase to bring some order
Target
Upside 659%
Price (€) 0.01
Market Cap (€M) 0.18
Perf. 1W: -26.8%
Perf. 1M: -33.1%
Perf. 3M: -87.1%
Perf Ytd: -97.3%
10 day relative perf. to stoxx600: -28.5%
20 day relative perf. to stoxx600: -56.2%
Earnings/sales releases30/04/2019

FY18: strong acceleration in H2 18, led by the audit & inspection division

The audit & inspection division (i.e. Factorig) is driving the performance of the group with offshore drilling restarting. Note that the activity picked up in Q4 18 (revenue was up 63% qoq), despite the drop in Brent prices (-8% qoq) and this is encouraging as it shows the resilience of the contractor with oil above $60/bbl.


Fact

FY18 revenues: €7.1m (+4 % yoy)

• Factorig (Audit & Inspection): €4.2m (+61% yoy)
• Services (Technical Assistance): €2.7m (-34% yoy)
• Solutions (Engineering): €0.2m (€0.1m FY17)

EBITDA: €0.02m (vs. €-0.55m in 2017)
Net income: €-0.28m (vs. €-1.21m in 2017)
Net debt: €0.44m (vs. €0.41m in 2017)


Analysis

As indicated by the trading update earlier this month, the Oil & Gas activities are recovering, with an acceleration seen in H2 18. It seems that the business reached rock-bottom between Q4 17 and Q1 18 with H2 revenues up by 27% yoy at €4.2m, compared to €2.9m in H1 18. The audit & inspection division (i.e. Factorig) is the biggest contributor for Dietswell, accounting for 59% of the group’s revenue, supported by demand in offshore drilling.

The activity picked up in Q4 18 with revenues of €2.6m (vs. €1.6m in Q3 18), even though Brent prices averaged $69/bbl in this quarter, compared to $75/bbl in Q3 18. This confirms our view that capex spending in oil & gas is steady with an oil above $60/bbl.

Group margins improved in H2 18, once again driven by the Factorig division with an EBITDA margin of 10% at €0.4m and a net income at €0.32m. The full-year EBITDA is back in positive territory thanks to the cost reduction programme started three years ago, while net income is still negative, due to the investments in New Energies (i.e. EOLFLOAT project) in H1 18.

The backlog stands at €7.9m (+10% yoy) and is down 20% since November 2018, yet management commented on potential contracts that could be awarded by the end of H1 19.

In New Energies, as mentionned previously, Dietswell has been awarded a contract for the preliminary design of three Energy Harvesting Units. The purpose of these floating units is to provide green power (i.e. the unit will be equipped with a wind turbine) to an offshore oil & gas platform. This is a promising project as oil & gas integrated companies are under pressure to reduce their carbon footprint, and equipping oil platforms with alternative sources of power would contribute to lower scope 1 greenhouse gas emissions in exploration & production activities.

Lastly, Dietswell will hold a strategy update on 12 June.


Impact

We will update our model with the FY18 figures. Buy recommendation is maintained.


Updates
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