Latest Research

Global Construction (GCS) - Sale Of Equipment Hire Division

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GCS has entered into a conditional agreement with Onsite Rental Group to sell part of its equipment hire division. The terms of the sale are as yet undisclosed, but GCS has stated that the sale will be greater than the $23m total asset written down value. With the sale of the higher margin equipment hire business, we expect EBITDA margins to reduce. However, the business will be less capital intensive and will carry less debt on the balance sheet. We believe this to be positive for GCS as lower depreciation and interest charges should more than offset the EBITDA impact. GCS expects to be in a net cash position of circa $30m on completion of the sale. Balance sheet strength and an increasingly capital light business underpin our BUY call on a revised $0.90 valuation (previously $0.80).

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