The European oilfield services sector anticipates potential long-term growth for investors in its offshore/subsea construction subsegment with valuations offering attractive entry points, says Bastien Dublanc, Analyst at RBC Capital Markets.
“This sector does not look cheap based on 2012 earnings as it trades at 15 to 16 times p/e. For 2013, based on the outlook we anticipate and the visibility, which is likely to build during the year, valuation drops to between 10 to 12 times earnings on 2013. At this point of time, investors will look at buying a strong earnings growth story between 2012-2013,” he said.
Dublanc says Technip (TEC.PA), which is listed in Paris, is the best stock to take advantage of the long-term growth potential of offshore and subsea capex. He says he forecasts growth over the next five years for subsea equipment to be slightly north of 20% and operators to grow their offshore spending excluding drilling about 10% to 15% over the next few years.
“Regarding 2013, yes, we see the sector being quite attractive. In that respect, the oilfield services sector in Europe is probably better suited for growth investors compared to value investors; 2012 will help to confirm that assumption,” Dublanc said.
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