Equity Analysis /
United Kingdom

GB : ContourGlobal - Defensive model, strong cash flows

    Alex O’Hanlon
    Alex O’Hanlon

    Analyst - Support Services

    Contributors
    Sanjay Vidyarthi
    Joe Brent
    CGS-CIMB
    25 March 2022
    Published by

    ContourGlobal has delivered FY21 adj. EBITDA growth, above the top end of guidance. Net debt was better than expected, with strong FCF. Dividend growth of 10% was in line. Long term contracts, combined with a high proportion of fixed rate debt mean that visibility on FCF is high, despite market volatility. We also expect value creation through M&A and disposals. We make no change to FY22E adj. EBITDA at this stage, but modestly reduce net debt. A CY22E EV/EBITDA of 6.4x with a 7.8% yield is cheap. DCF/Gordon Growth model TP of 305p unchanged. Buy.