McCoy Global (MCB.TO), mcap=C$34m, price C$1.19 vs C$1.00

– Bet on continued strength in energy markets.
– Supplier of hydraulic tongs used to secure pipe when drilling O&G wells.
– Will benefit from an uptick in drilling activity – rig count still down 25% vs pre-covid levels.
– At 3xEBITDA if activity reverts to ’18-’19 levels.
– Expected to outperform vs previous cycles due to restructuring during covid.
– Capital light due to outsourced manufacturing.
– Downside well protected by TBV and WC.

– Trades at 3xEBITDA assuming revenues revert to ’18-’19 levels of $50m (vs $33m in ’21) and using mgmt’s guidance of 15-17%.
– At 6x EBITDA would be C$1.85 stock.
– Downside protected by C$1.03 in TBV/share and C$0.79 WC/share.

Exp. gain: +85% to C$1.85/share.

Full $MCB.TO write-up (free guest account required):

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