IGas Energy Plc – Value Analysis (LONDON:IGAS) : December 29, 2017

Capitalcube gives IGas Energy Plc a score of 44.

Our analysis is based on comparing IGas Energy Plc with the following peers – Bowleven plc, JKX Oil & Gas plc, Ascent Resources plc, Cabot Energy Plc, Volga Gas plc, Premier Oil plc, EnQuest PLC and Rockhopper Exploration plc (BLVN-GB, JKX-GB, AST-GB, CAB-GB, VGAS-GB, PMO-GB, ENQ-GB and RKH-GB).

Investment Outlook

IGas Energy Plc has a fundamental score of 44 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 0.57 is about median in its peer group.
  • IGAS-GB outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • IGAS-GB has relatively high profit margins while operating with median asset turns.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • Over the last five years, IGAS-GB‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While IGAS-GB‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • IGAS-GB‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

IGAS-GB would seem to have a hard time raising additional debt.

  • With debt at 24.06% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 8.64%), and relatively tight interest coverage level of -0.48x, IGAS-GB would have a hard time raising much additional debt.
  • Of the 8 chosen peers for the company, only 5 of the stocks have an outstanding debt balance. Companies with no debt include BLVN-GB, CAB-GB and RKH-GB.

IGAS-GB has moved to a relatively low liquidity from a Limited Flexibility profile at the prior year-end.

  • IGAS-GB‘s interest coverage is its lowest over the last four years and compares to a high of 1.66x in 2014.
  • Though its interest coverage has remained relatively stable at -0.48x compared to 2015, its peer median has increased to 0.53x from -0.32x during this period.
  • Interest coverage fell 1.01 points relative to peers.
  • IGAS-GB‘s debt-EV is its lowest over the last four years and compares to a high of 87.63% in 2015.
  • The decrease in its debt-EV to 24.06% from 87.63% (in 2015) was also accompanied by a decrease in its peer median during this period to 8.64% from 45.76%.
  • Relative to peers, debt-EV fell 26.44 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Bowleven plc 0 86.09 No interest exp 999
JKX Oil & Gas plc 30.03 0.25 -0.54 -59.65
Ascent Resources plc 8.64 1.22 -1.74 -32.57
Cabot Energy Plc 0 1.89 -30.49 -752.59
Volga Gas plc 8.18 1.82 2308.99 353.77
Premier Oil plc 99.87 0.81 1.05 14.54
EnQuest PLC 87.47 0.66 0.53 10.79
Rockhopper Exploration plc 0 3.36 No interest exp 999
IGas Energy plc 24.06 3.62 -0.48 -5.95
Peer Median 8.64 1.82 0.53 10.79
Best In Class 8.18 86.09 2308.99 999

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Company Profile

IGas Energy Plc is an exploration company. It is engaged in the exploration, development and production of onshore oil and gas. The company was founded by Andrew Austin Philip and Francis Robert Gugen in 2003 and is headquartered in London, United Kingdom.

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