Royal Boskalis Westminster NV – Value Analysis (EURONEXT AMSTERDAM:BOKA) : December 19, 2017

Capitalcube gives Royal Boskalis Westminster NV a score of 19.

Our analysis is based on comparing Royal Boskalis Westminster NV with the following peers – SBM Offshore NV, MaireTecnimont SpA and Royal BAM Groep NV (SBMO-NL, MT-IT and BAMNB-NL).

Investment Outlook

Royal Boskalis Westminster NV has a fundamental score of 19 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 1.31 is about median in its peer group.
  • BOKA-NL‘s EBITDA-based price implies better than peer median growth.The market seems to expect a turnaround in the company’s current EBITDA-based return on equity.
  • BOKA-NL‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • 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, BOKA-NL‘s return on assets has eroded from above median to below median among its peers suggesting declining relative operating performance.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • While BOKA-NL‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median Price/EBITDA ratio and may be factoring in some sort of a strategic play.
  • The company’s capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • BOKA-NL‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

BOKA-NL would seem to have a hard time raising additional debt.

  • With debt at a relatively low 8.09% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 43.24%), and relatively tight interest coverage level of -7.27x, BOKA-NL would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • All 3 peers for the company have an outstanding debt balance.

BOKA-NL has moved to a Constrained from an Quick & Able profile at the prior year-end.

  • BOKA-NL‘s interest coverage is its lowest over the last four years and compares to a high of 16.69x in 2015.
  • While its interest coverage decreased to -7.27x from 16.69x (in 2015), its peer median increased during this period to 2.67x from 2.11x.
  • Interest coverage fell 24.52 points relative to peers (and is now lower than its peer median). It is also below the 2.50x coverage benchmark unlike the peer median.
  • BOKA-NL‘s debt-EV is its lowest over the last four years and compares to a high of 23.44% in 2012.
  • The decrease in its debt-EV to 8.09% from 19.66% (in 2015) was also accompanied by a decrease in its peer median during this period to 43.24% from 49.80%.
  • Relative to peers, debt-EV fell 5.00 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
SBM Offshore NV 63.05 1.26 2.22 13.07
MaireTecnimont SpA 39.81 1.17 5.75 30.42
Royal BAM Groep NV 46.66 1.05 3.12 10.72
Royal Boskalis Westminster N.V. 8.09 0.99 -7.27 85.3
Peer Median 43.24 1.11 2.67 21.74
Best In Class 8.09 1.26 5.75 85.3

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Company Profile

Royal Boskalis Westminster NV engages in the provision of maritime services. It operates through the following segments: Dredging & Inland Infra, Offshore Energy, and Towage & Salvage. The Dredging & Inland Infra segment involves all activities required to remove silt, sand, and other layers from the water bed. The Offshore Energy segment includes oil and gas companies and providers of renewable energy such as wind power. The Towage & Salvage segment deals with incoming and outgoing oceangoing vessels. The company was founded in 1910 and is headquartered in Papendrecht, the Netherlands.

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