Latest Research

Ausdrill Limited (ASL) - Momentum Into FY18

Ausdrill Limited LogoWe remain attracted to ASL’s business quality and earnings momentum, but feel share price gains of nearly 50% over the last 8 weeks largely captures these attributes. Current trading multiples point to the longer term potential, where we expect earnings >20cps given historic performance. In our view delivery against these expectations is required to drive further share price gains and we downgrade to hold (prior buy).

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CTI Logistics Limited (CLX) - Patience Will Be Rewarded

CTI Logistics Limited LogoWe believe we are currently witnessing the trough in CLX’s earnings. We have attempted to estimate reasonable mid-cycle WA revenue and earnings, and think CLX can generate group EBITDA of $21m+ in a more normal operating environment. An EV that is ~5x this number is undemanding, especially if we adjust for unused land at Hazelmere (we estimate worth ~$25m). Our buy call is based on significant value on a long term view.

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Peet (PPC) - WA State Government JV For Brabham

Peet Limited LogoThe WA State Government’s housing project in Brabham will take advantage of proposed transport infrastructure linking the Swan Valley to Perth and provide PPC, as the preferred proponent, with a robust development pipeline through next decade. PPC will establish a wholesale fund with the Perron Group and act as development manager. The Company entered 2H17 in good shape, with a sound balance sheet (recently bolstered by a $50m 51/4 year bond issue) and a well-diversified land bank centered on growth corridors across Australia. We maintain our positive view and buy call.

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Matrix Composites & Engineering (MCE) - Staying Afloat

Matrix Composite & Engineering LogoOffshore oil and gas remains a tough market given low oil prices and the rise of shale producers. This has meant very poor sales for MCE in its traditional riser buoyancy market, leading to Company guidance for an anaemic $9m revenue for 2H17. This has caused management to look to diversify the business away from riser buoyancy to better task the composites manufacturing facility in Henderson. Whilst some success has been had in initial diversified products, we believe it will take time to penetrate new markets. The level of uncertainty is reflected in our HOLD call on a revised $0.43 valuation (previously $0.62).

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GR Engineering (GNG) - Revenue Deferred

GR Engineering LogoGNG downgraded FY17 revenue guidance due to slippage in anticipated progress claim timing on recently awarded projects, causing ~$30m revenue to be deferred from FY17 into FY18. As a result, we have decreased our FY17 revenue and EBITDA forecasts to $215m and $16m respectively (previously $250m and $25m). More positively, this deferment of revenue has boosted FY18, where GNG has given guidance for $300-$330m. The anticipated record revenue for FY18 underpins our BUY recommendation on a revised valuation of $1.70 per share (previously $1.75).

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