The Q3 trading update indicates that, despite the very challenging macro environment, Medserv PLC (MT:MDS) is maintaining a robust overall performance aided by the initial contribution of METS. Opportunities, especially in the Eastern Mediterranean, continue to support a view of improved organic development in FY17. Our numbers are unchanged and our fair value calculation currently stands at €2.03 per share.
Q3 trading performance
Medserv has stated that it expects to be close to its revised target revenue of €38m for the full year on currently contracted work, although there is an element of timing with respect to new projects that could improve this. METS continues to see the benefit of a stronger than budgeted performance in Oman, with the UAE also performing well. While Iraq has proved problematic, cost reduction has returned the operation to break-even on current volumes since October. The first evidence of revenue synergy came from the completion of a pipe testing contract at the Hal Far facility in Malta, using both technology and expertise gained from METS.
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