Even taking into account the lumpy earnings typical to construction-exposed contractors, financial performance this year is unusually weak. Our analysis of historic performance across the merged business suggests, even in a low case scenario, a more typical EBITDA performance comfortably ahead of current FY19 guidance. In our view this aberration provides investors an opportunity to take advantage of a price that appears to focus solely on the near term (the current market cap is less than SRG standalone prior to the merge). We recommend investors BUY on a potentially significant medium term uplift in financial performance. Our revised valuation on conservative forecasts is $0.56 (prior $0.60).
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