Latest Research

Threat Protect (TPS) - Picking Up The Run-Rate

Threat Protect LogoThe strong performance in 4Q17 sets TPS up well for FY18. The nature of both Monitoring and Guarding segments provides for a high degree of revenue consistency and we anticipate a baseload of ~$14m revenue in FY18. We expect further acquisitive growth in the Monitoring business to boost this number and, given the leverage in the underutilised control rooms, have a positive impact on margin. We upgrade to a speculative buy (prior hold) recommendation on a revised blended valuation of $0.040 (prior $0.030).

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Orbital (OEC) - Looking For A 2H18 Uplift

Orbital LogoThe FY17 results were as expected after being well flagged last month, and we continue to see the significant opportunity for growth in the UAVE segment. Our earnings forecasts are now strongly weighted to this sector, although we will likely need to wait until 2H18 to get clearer evidence of potential. The share price, post recent falls, more than factors in the high degree of forecasting risk and we upgrade to speculative buy (prior hold) on an unchanged valuation.

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Gage Roads (GRB) - According To Plan

Gage Roads LogoThe $10m capital raising during the year has given GRB the ownership structure and financial strength to execute strategy by promoting proprietary brands through all channels to market. One year into its plans to “return to craft”, the Company has made an encouraging start and comfortably delivered against expectations. We maintain a positive view, a valuation of $0.066, and a buy call.

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Austin Engineering (ANG) - Miners Spending Again

Austin Engineering LogoEchoing comments from peers ANG noted a significant improvement in market conditions in 2H17 as a pick-up in replacement capex from major miners drove a sharp rebound in performance. After a breakeven result in the 1H ANG delivered full year underlying EBITDA of $14.3m, towards the top end of the $11-15m guidance range. Australia was the key driver, as the Perth operations in particular benefited from a jump in orders. We are encouraged by 1H18 EBITDA guidance of $11-12m based largely on committed work, and expect the positive recovery trend to continue in future periods. Reflective of investors looking at significant growth potential in the mining services sector beyond FY18, our valuation increases to $0.26 (prior $0.22). Buy maintained.

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Southern Cross Electrical Engineering (SXE) - Turning On The Lights

Southern Cross Electrical Engineering LogoFY17 represented a transformational year for SCEE, broadening both its sector and geographic presence through the acquisitions of Datatel and Heyday5. The Company ends the year with a record order book of $480m (FY16 order book was $55m), and a potential pipeline of another $1.3bn work. Significant restructuring has also reduced SCEE’s fixed cost base, providing expanded EBITDA margins for FY18 and beyond. SCEE’s successful diversification, higher than expected order book, and reduced fixed cost base has caused us to increase our valuation to $0.85 (previously $0.60). BUY call maintained.

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