Harland and Wolff Dock Contracts with Cunard and P&O Cruises

Harland and Wolff has landed two new contracts with two ships from Cunard and P&O Cruises.

H&W Belfast Springs to Life

Both cruise ship operators have selected Harland & Wolff's iconic 81-acre Belfast shipyard to undertake drydocking works on two of its ships - Aurora and Queen Victoria.

Arrival of these ships will mark another milestone completed in relation to the company's re-activation strategy across its key markets.

With a length of 294m and a beam of 32.3m, Queen Victoria will be the largest cruise ship ever to have drydocked in a UK shipyard. Aurora has 270m length and beam of 270m and will be in the yard from 9th - 23rd June 2022.

Harland & Wolff has now secured contracts in four out of the five markets it targets to operate in - commercial, cruise, ferry, renewables and energy.

A Rising Tide Raises All Boats

The market for H&W is looking particultly healthy. There are over 150 domestic vessels to be built in the coming years, with fabrication works for the renewables sector following the latest ScotWind licensing round.

Repair & maintenance projects, as well as through life support services, are key activities that will facilitate continuity of skills and enhance productivity levels required to win new build projects. The group CEO John Wood hopes to secure a defence contract in the near future.

Harland & Wolff, group CEO John Wood, commented: "Our facilities are ideally placed to capitalise on these types of large projects whilst we continue servicing our smaller but regular clients. We have now secured contracts in four out of our five markets; commercial, cruise & ferry, renewables and energy - we now hope to complete the final milestone of securing a defence contract in the near future."

Over the past three months the sahres have traed from lows of 12.8p at the end of February before a strong bull run up to 23p today.

HARL price chart

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Another positive announce ent from H&W following their positive trading update at the end of March.

Clearly 1Q22 has been an extremely busy period, especially for the Belfast facility, and the second quarter already looks to be building up nicely.

The Repair Dock in Belfast has been full since the first week of January, welcoming over 15 vessels to undertake a number of repair works, with Appledore scaling up on the pontoon build for RNLI in addition to welcoming several smaller vessels (dredgers, offshore support vessels and smaller fishing vessels etc.

Arnish has been busy with the contract that it signed last year and continues its fabrication at pace in addtion to a contract variation to its existing contract that extends its scope and works, thereby generating additional revenues for the site.

Positive Outlook

As we move into 2Q22, the Company is involved in a number of advanced negotiations that it believes should come to fruition over the course of the next few weeks and months.

The Company therfore remains confident in its ability to having all five of its key markets commercialised.

Analysts at Cenkos are estimating a base case FY22e for H&W of £35m revenue and Loss Before tax of £17.7m. However, some scenario modelling dependant upon a number of new contracts closing during the period, could see revenue increase to £89m with the Company losing less than £1m at the LBT line.

Whilst these forecasts don't include the potential sale and 'equity kicker' of the Islandmagee project, analysts have calculated the inherent value of the Islandmagee project (representing c25% of the UK’s gas storage capacity once constructed) as worth more than the current Market Capitaisation of the entire Company!

Either way, the balance sheet remains strong following the £8m placing at the end of 2021 and the new $70 million Green Corporate Debt Facility announced in March 22 and investors are likely to see an attractive entry point here for FY22.