Investment Summary of Dataline Oil Services
Investment Summary of Dataline Oil Services
Overall Investing Decision
Invest in the company if the bid is under £74m.
Top reasons to invest
Industry trend: Oil industry has rebounded from bottom since 1998 and is expected to continue recovering in the next 5 years.
Crude Oil Price from 1977
Competitive advantage of the company: DOS is one of the three major oil operators in the world, which means DOS is among the top tier. Also, financial performance in the recent year is very good ad DOS experienced continuous growth from 1998 to 2002.
Management team of DOS has rich experience in the industry and company management with high historical profile.
Valuation (Multiple)
Based on the comparative company Baker Hughes’ trading data, the EV/ EBIT multiple for DOS is 8.43 after adjustment. (Excel Appendix)
Final EV based on the 2002 EBIT should be £74m.
Appendix
Baker Hughes, a direct competitor of DOS (albeit a very much larger and stronger business), was quoted on the New York Stock Exchange at 28.1 times net income.
FT 100 Index was quoted at 21 times historic after-tax profits;
‘normal’ price was in the region of six to eight times EBIT
-> EV/EBIT Multiple in the region of (8.03,10.70)
Dataline Oil Services Trading Results
£millions
Year to March 31
2002
2001
2000
1999
1998
Sales
46.1
31.5
25.6
20.3
EBIT*
8.8
8.1
5.7
3.5
0.7
As the Baker Hughes is a much larger and stronger business, the multiple of DOS is set to have a 10% discount.
Multiple
8.43
EV
74
*Earnings before interest
and taxes
Overall Investing Decision
Invest in the company if the bid is under £74m.
Top reasons to invest
Industry trend: Oil industry has rebounded from bottom since 1998 and is expected to continue recovering in the next 5 years.
Crude Oil Price from 1977
Competitive advantage of the company: DOS is one of the three major oil operators in the world, which means DOS is among the top tier. Also, financial performance in the recent year is very good ad DOS experienced continuous growth from 1998 to 2002.
Management team of DOS has rich experience in the industry and company management with high historical profile.
Valuation (Multiple)
Based on the comparative company Baker Hughes’ trading data, the EV/ EBIT multiple for DOS is 8.43 after adjustment. (Excel Appendix)
Final EV based on the 2002 EBIT should be £74m.
Appendix
Baker Hughes, a direct competitor of DOS (albeit a very much larger and stronger business), was quoted on the New York Stock Exchange at 28.1 times net income.
FT 100 Index was quoted at 21 times historic after-tax profits;
‘normal’ price was in the region of six to eight times EBIT
-> EV/EBIT Multiple in the region of (8.03,10.70)
Dataline Oil Services Trading Results
£millions
Year to March 31
2002
2001
2000
1999
1998
Sales
46.1
31.5
25.6
20.3
EBIT*
8.8
8.1
5.7
3.5
0.7
As the Baker Hughes is a much larger and stronger business, the multiple of DOS is set to have a 10% discount.
Multiple
8.43
EV
74
*Earnings before interest
and taxes