Why Thalassa Holdings Limited shares are up 15% today

Thalassa Holdings Limited (LON: THAL) has jumped today off the back of an interesting update.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in Thalassa Holdings (LSE: THAL) have jumped by around 15% in early deals this morning after the company issued somewhat of a cryptic press release. Specifically, the press release states, “the Board of Thalassa expects to announce shortly the revised trading outlook for the Company following review at a Board meeting today.” 

With Thalassa’s shares heading higher, it looks as if the market is betting on the announcement of an improved trading outlook for the company when the board reports after its meeting today. This conclusion appears to be drawn from the fact that Thalassa also announced this morning that it has been awarded a contract from ConocoPhillips Skandinavia AS to acquire seismic data sets on the Eldfisk field in the North Sea during 2017. The shoot is estimated to last approximately two months and is expected to commence during the second quarter. 

The contract has been awarded to Thalassa’s wholly owned subsidiary WGP Group Ltd, which is already on track to report a better than expected financial year. At the end of November management announced it was upgrading WGP’s full-year 2016 sales forecast from $10.5m to $13.6m. 

Turbulent year

It has been a rocky year for Thalassa. The company, which provides services to the oil & gas industry, has been hit hard by the slump in oil & gas prices and drop in spending on offshore exploration activities. On revenues of $15.5m for 2014 and $18.9m for 2015, the company reported a net loss of $12.2m and $12.3m for each year respectively. Operating income came in at -$1.1m for 2014 and $1.4m for 2015.  

For the first half of 2016, the company reported revenues of $5.2m vs. $9.9m last year and gross profits of $2.9m vs. $4.2m last year. 

So, based on first half trading figures it looks as if 2016 is set to be another tough year for the group. City analysts expect the company to report a pre-tax profit of £0.4m this year falling to £0.24 for 2017. 

Activist activities 

As well as the tough trading environment, Thalassa has been entangled in a boardroom battle with The Local Shopping REIT this year. Thalassa acquired around a fifth of The Local Shopping REIT’s shares back in September (at the same time the company also invested £400,000 in Papua Mining plc) and immediately started pushing for changes. 

At the beginning of November, Thalassa demanded The Local Shopping REIT hold a general meeting to remove from its board of directors Stephen East and Nicholas Vetch and to appoint to its board Duncan Soukup, Chairman of Thalassa, John Hutchinson and Toby Burgess. 

At the beginning of December, the Local Shopping REIT’s shareholders voted against all proposals put forward by Thalassa. Now Mr. Soukup (who owns a majority shareholding in Thalassa) is engaged in a war of words with The Local Shopping REIT. 

Conclusion 

Thalassa’s shares are rising today off the back of expectations that the company is about to upgrade its full-year earnings forecasts, but this bounce may be short lived if revenues continue to slide and management continues to attack other companies. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

After rising a stunning 97% is this FTSE star still my best share to buy today?

This time last year Harvey Jones declared FTSE 100 data analytics firm RELX to be the best share to buy.…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

2 top growth stocks I’m buying in December… before it’s too late

When it comes to growth stocks, Stephen Wright thinks rising prices are limiting opportunities right now. But it’s quality, not…

Read more »

A front-view shot of a multi-ethnic family with two children walking down a city street on a cold December night.
Investing Articles

2 top dividend shares to consider buying in December

When it comes to passive income in December, Stephen Wright's targeting shares in companies focused on paying dividends to investors.

Read more »

Dividend Shares

3 crucial factors for building my passive income

Ken Hall wants to build a passive income that can set him up for years to come. Here are three…

Read more »

Man smiling and working on laptop
Investing Articles

£20,000 in savings? Here’s how Stocks and Shares ISA investors could target a near-£2,000 monthly income

Investing a lump sum in this investment trust could help Stocks and Shares ISA investors make mammoth returns, says Royston…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

Surprise! This monopoly stock has taken over my Stocks and Shares ISA (again)

Our writer has a (nice) dilemma in his Stocks and Shares ISA portfolio after one incredible growth stock rocketed higher…

Read more »

Investing Articles

10.5% yield – but could the abrdn share price get even cheaper?

Christopher Ruane sees some things to like about the current abrdn share price. But will that be enough to overcome…

Read more »

Investing Articles

£9,000 to invest? These 3 high-yield shares could deliver a £657 annual passive income

The high yields on these dividend shares sail sit well above the FTSE 100 average of 3.6%. Here's why I…

Read more »