Shawcor (SCL.TO), mcap=$2.1bn, price $94.70 vs $9.16

$SCL.TO pitch:
– Undervalued Canadian industrial company with a dominant position in offshore pipeline coating.
– The share price does not reflect its recent strategic transformation and financial de-leveraging.
– Over the last 3 years, SCL completed several actions to optimize its portfolio of products focusing on the highest-value, most differentiated industrial businesses and divesting or shutting down non-core activities.
– Cost optimization efforts resulted in a 28% headcount reduction.
– Strong momentum in all of its businesses.
– Management expects H2’22 earnings to inflect & be substantially higher.

$SCL valuation:
– Trades at about 7x 2021 EBITDA of C$106m.
– Valuing Composite Systems and Automotive & Industrial businesses at 8x EBITDA, and the Pipeline segment at 4.5x EBITDA delivers a fair equity value of C$15/share.

Exp. gain: +100% to C$15/share.

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

Leave a Comment