finnCap Research Company Notes - 16 August 2018

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Sector: Industrials

Capital Drilling (CAPD): Interims point to stronger 2H as utilisation rises  

Key data                              

• Share price (p): 44.0
• Target price (p): 85.0
• Market cap (£m): 59.5
• Enterprise value (£m): 55.7

Interim results were in line with expectations and on track to achieve FY forecasts, which were raised in June. Q1 was the low point in revenue and rig utilisation. Once the relocation of rigs is complete in Q3, there will be 32 rigs in West Africa, where exploration is growing and active. Utilisation should progressively increase on known new contracts starting in Q3 as well as the expectation of further contract wins. Tanzania will remain a drag on sentiment until resolved. The shares look good value, and our 85p price target is based on an EV/EBITDA of 5.3x for 2019, compared to the current level of 2.7x.

David Buxton | dbuxton@finncap.com