SBM Offshore is an investment in long-term contracts and cash-flow in the oil industry. The offshore company builds and operates FPSO (Floating Production Storage and Offloading) platforms (that produce around 2 million barrels per day).
After a positive Q2'24 the company increased 2024 targets and doubled its share repurchase program.
The investment case is based on the Lease and Operate business with double digit growth and 50% EBITDA margin. This segment provides a sound basis for annual cash flow. The company is undervalued at 6x 2023 EPS. Priced at €16 the company returns a 10% cash yield with >20% margin of safety on its 2025 earnings potential.