Vallourec : Goldman Sachs a initié la couverture

ven 23 jui, 16h25

Goldman Sachs (NYSE: GS - actualité) a initié la couverture de Vallourec (Paris: FR0000120354 - actualité) avec une recommandation "Surperformance" une valorisation de 1.070 Euros par action. Goldman Sachs estime que la récente baisse du titre offre un point d'entrée intéressant et que Vallourec est bien positionné pour profiter d'une demande pour les tubes sans soudure qui devrait rester forte à l'horizon 2009. Goldman Sachs anticipe une progression de 77% d'EBITDA de Vallourec entre 2005 et 2008.

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mareva

Leveraging pricing power. Demand for premium seamless tubes looks set to remain strong through to 2009E, driven by heavy capex in the oil & gas sector coupled with a surge of power generation capacity being built in China. We believe the recent sharp decline in Vallourec’s share price presents a compelling entry point to the continuation of the growth story. We initiate coverage with an OP/N rating and fair value of €1,070 per share.

Vallourec is well positioned to keep benefiting from accelerating demand for premium seamless tubes
Vallourec’s 15% EBITDA margin expansion from 2003 to 2005 demonstrates the pricing power a company can gain in a supply constrained industry with booming demand. As one of only three major global premium seamless tube producers, we forecast Vallourec will continue reaping the rewards of the strong outlook for demand, driven by heavy capex in the oil & gas sector, as well as the surge of power generation capacity being built in China. We forecast 2008 EBITDA to be 77% higher than in 2005.

Supply is being expanded; we expect demand growth to outstrip new capacity
Vallourec’s current strong pricing power is being driven by downstream capacity constraints in the premium segments of the market for facilities and know-how in alloying, heat treating and/or threading of seamless tubes to withstand increasingly demanding environments. Our projections indicate that planned capacity expansion will continue to be outstripped by growth in demand.

Our synthetic multiple valuation approach implies 25% potential upside
Justifying a valuation framework for a niche steel producer exposed to the energy market, having undergone a massive re-rating, is a debatable subject. Our synthetic multiple approach weights the premium-end of the company onto an oil services multiple and the commodity-end onto a premium steel multiple. Based on this, our 2007E EV/DACF-derived fair value for Vallourec is €1,070.

Risks to our view include a slowdown in capex requiring seamless tubes, which would alter the favourable supply-demand balance outlook that we forecast.