Ann: Trading Update, page-22

@Austinhealey

you said the same thing 2 weeks ago and i explained how you were wrogn then. now youve just repeated innaccuracies

let me refresh for you

share price of mrm and other osvs is clearly predomninantly oil price driven - the correlation is very clear, regardless of what you or i might think drives underlying MRM earning mechanics

https://www.google.com/finance?q=ASX:MRM&ei=me5dWKC8IIOK0ASh377IAw

this has equally been case with slumberger, baker hughes, teekay and other oil-related service cos etc in the states

and the drillers and tankers there are in exactly the same position as the vessell cos in Asia - big backlog of cheap machinery that will cap per diem rates for long period of time


part of the whole nuance here is to recognise the difference between a stock price and an actual earnings bottom - because stocks move before earnings.

also - i didnt say anything about gulfmark's mgt through a downturn. we were specifically talking about price forecasting - not cost mgt

cost mgt is easy. same as talking about continued downward forces is easy during oversupply.

the only forecasting insight worth considering is those group;s who recognise inflection points ahead of them occurring. think New Hope Coal selling a coking coal development project for $2.4billion in 2011 - then buying 30% of a the best coking coal mine in Australia in 2014

if they dont have a history of doing that I treat their forecasting ability as the rest of the industries - ie they dont have any thats worth talking about


at the intrinsic heart of it the math is this

asset book value $950m

cash = $50m
debt $400m

mark to market asset value = ? probably $700-850million

equity value = $100m

So you have shares worth $100m with a net asset backing of $350-500m

There is amost no actual downside risk to your share buyign at this point - unelss its a stop loss.

but in the event the company was wound up it would certainly pay back its creditors + have 100c in the dollar for sghareholders buying now

Thats why GE bought into Baker Hughes in the US - thats why smart investors will buy MRM now.

Its not without volatility risk. Default shocks etc can easily halve the stock price on a bad day

But there's no realistic risk to your capital buying shares for the longer term at this price - and large upside should it work out anything better than the worst case scenario.