Post Practice For KK - Temporary Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Post Practice For KK - Temporary

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Kerm Yerman who wrote (54)	2/11/1998 10:59:00 PM
From: Kerm Yerman	of 122

Drilling & Oilfield Services UPDATE February 10, 1998 Enerflex (EFX-T $36.00) Enerflex reported EPS of $0.52 in Q4/97 compared to $0.36 in Q4/96. Revenue growth over the same period was 27% which reflects robust demand for natural gas compression equipment both in western Canada and internationally. Margins in the latest period were also excellent reflecting a high level of parts and service business as well as the timing of completion of international contracts. Outlook The order backlog in both western Canada and internationally is very strong. An office in the U.K. was recently opened to service the rapidly growing North Sea gas compression equipment market. The planned increase in natural gas pipeline capacity out of western Canada is also expected to boost demand for compression equipment. Enerflex is building a new production facility in Calgary which will double manufacturing capacity and should be completed in late 1998. We have raised our 1998 EPS estimate from $2.00 to $2.20 to reflect the favourable outlook. Valuation As shown in the following table, Enerflex has established an excellent track record of growth in revenue and net income. Since 1993, Enerflex has generated a compound annual growth rate of 29% in revenue and 34% in earnings per share. This time frame encompasses a period of weak gas pricing, in the winter of 1994-95, and demonstrates the ability of this company to grow in difficult market conditions. The expansion of the parts and service and overhaul market segments as well as the very successful international expansion are examples how Enerflex has offset some temporary weakness in western Canadian gas markets. Enerflex Quarterly Revenue & EPS Revenue($mm) Q1 Q2 Q3 Q4 Year 1993 $19.9 $28.9 $37.9 $33.3 $120.0 1994 45.7 48.9 55.9 66.9 217.3 1995 67.6 48.7 57.2 49.3 222.7 1996 55.6 52.4 62.5 75.5 246.0 1997 82.8 84.3 73.6 95.5 336.2 EPS-ProForma Q1 Q2 Q3 Q4 Year 1993 $0.07 $0.13 $0.16 $0.16 $0.51 1994 0.24 0.26 0.33 0.35 1.18 1995 0.35 0.28 0.25 0.20 1.07 1996 0.20 0.26 0.28 0.36 1.10 1997 0.37 0.40 0.38 0.52 1.67 Long term we are very optimistic about the demand for compression equipment in western Canada for two reasons. First, the increasing pipeline capacity will create incremental demand for equipment. Second, older mature gas fields will continue to require more powerful compression equipment to maintain their deliverability. The international prospects are equally enticing as Enerflex has grown the international revenues from virtually nil five years ago to the current level of over $70 million (20% of revenue). We have a one-year target price of $40 per share with considerable longer term upside. We recommend that investors buy shares of this exceptionally well-managed company.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next