Narrative Update on Vallourec
Analysts have trimmed their fair value estimate for Vallourec slightly to €19.97 from about €20.22, reflecting updated assumptions for revenue growth, profit margin and future P/E, while keeping the discount rate broadly unchanged.
What's in the News
- Secured a large OCTG supply and services contract with Shell for the Orca offshore project, covering 10 planned wells and an estimated 12,000 to 15,000 tons of pipes plus onshore and offshore support services (Client announcement).
- Awarded a contract by TechnipFMC to supply more than 20,000 tons of subsea seamless premium carbon steel line pipes and coating services for the Orca project operated by Shell Brasil (Client announcement).
- Won a follow on order from TotalEnergies for more than 30,000 tons of premium tubular solutions, including around 3,000 tons of Premium Line Pipe with anti corrosion coating, for the AGUP2 phase of Iraq's Gas Growth Integrated Project (Client announcement).
- Committed to invest at least US$39m, with a possible total of up to US$48m, to expand threading capacity for VAM high torque connections at the Youngstown, Ohio facility. The project is expected to create 40 full time jobs and be completed by early 2027 (Business expansion).
- Signed an MoU with Geostock to cooperate on hydrogen and CCUS storage infrastructure, combining Vallourec's Delphy hydrogen storage system and tubular solutions with Geostock's subsurface expertise and larger capacity storage concepts (Client announcement).
Valuation Changes
- Fair Value: trimmed slightly from €20.22 to about €19.97 per share.
- Discount Rate: kept broadly stable, moving marginally from 6.68% to 6.68%.
- Revenue Growth: revised slightly lower from about 5.00% to 4.82%.
- Net Profit Margin: adjusted modestly from about 12.43% to 12.21%.
- Future P/E: nudged up from about 10.43x to 10.54x.
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