Latest Research

Austin Engineering (ANG) - Strategy Delivering

Austin Engineering LogoUnderlying FY18 EBITDA of $23.2m was toward the top end of the guidance range. However, key for us is ongoing strategy execution. Business rationalisation sees ANG’s FY19 EBITDA guidance of $25-28m up at least 30% on the underlying performance of continuing operations in FY18 (on our numbers). The anticipated sale of non-core crane assets in Chile reduces depreciation and interest charges, with the resultant uplift in our forecasts reflected in a higher blended valuation of $0.27 (prior $0.25) The industry backdrop is supportive in the medium-term.

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Valmec (VMX) - Opportunity

Valmec LogoThe negative reaction to the underlying EBITDA result of $4.9m (reported $7.5m) provides an opportunity for investors looking to gain exposure to the improving environment in gas and related infrastructure services sectors. We see VMX trading on undemanding forward multiples after having built more conservatism into our forecasts.

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Pacific Energy (PEA) - FY'18 Results

Pacific Energy LogoFollowing the recent business update, there were no surprises in PEA’s $45.8m underlying FY18 EBITDA result.  Guidance in the range of $54-55m has been provided for FY19.  This is below our prior forecast, which we have adjusted, but in our view is largely underpinned by existing contracts and does not capture organic growth opportunities.  Reasons to like PEA are intact; in a mining services sector typified by volatile earnings, PEA offers rare visibility and consistency. 

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Decmil (DCG) - Funding Growth

Decmil LogoDCG is raising up to $45m via a 2-tranche placement, and up to a further $5m via an SPP, to position the Company to take advantage of a robust opportunity pipeline. DCG was solely exposed to WA resources a few years ago. Recent diversification now provides the Company with multiple, Australia-wide opportunities to benefit from the growing spend across the infrastructure, resources and renewables sectors.

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Peet (PPC) - Well Positioned

Peet LogoPPC’s FY18 NPAT of $49.1m was 10% up on FY17, while solid operating cash flow meant strong balance sheet metrics at year end. This financial strength provides flexibility, as does the large, diversified land bank. PPC is targeting earnings growth in FY19, which we believe is achievable given contracts on hand and the number of projects in development. Property market sentiment and pricing pressure are key risks, however given PPC is in a strongly cash generative phase, has a typically low-cost base, and is under no immediate pressure to replenish the land bank, we maintain a positive view.

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