Latest Research

Austal (ASB) - Securing The Future

Austal LogoASB’s momentum into 2H17 is driven by strong US performance last half. With group underlying 1H17 EBIT of $31.2m, the upgraded guidance of $55-60m for the full year looks achievable. Tenders for significant long term work in the US and Australia provide sound reasons to remain positive, and our hold call is based primarily on valuation grounds.

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GR Engineering (GNG) - Near Term Opportunities

GR Engineering logoThere were no surprises in GNG’s 1H17 result, with margin (10%) and NPAT ($7.9m) in line with our expectations. The Company anticipates FY17 results similar to FY16, consistent with prior indications and our forecasts. Conversion of potential near-term opportunities would underpin $250m revenue in FY17, and begin to build the FY18 order book. GNG is a highly regarded EPC contractor, evidenced by a solid track record. The share price is a fair reflection of this positive view and we maintain a hold call on a $1.50 valuation.

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CTI Logistics Limited (CLX) - Off The Lows

CTI Logistics LogoSeasonality notwithstanding, we are encouraged by an improved 1H17 performance, which saw underlying earnings (PBT of $4.0m) rebound off the 2H16 lows. To offset the pressures dictated by a weak WA economy, CLX has cut costs, enhanced productivity, and diversified such that the business is well placed to benefit from a pick-up in economic activity. A dividend declaration suggests directors agree. We now look to the longer term upside (our valuation is up from $1.20 to $1.50) and upgrade from hold to buy.

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Pacific Energy (PEA) - Charging Forward

Pacific Energy LogoWe are typically confident when waiting for PEA’s results, given past consistency and earnings visibility. The 1H17 did not disappoint, and underlying EBITDA of $20.4m was ahead of the $20.0m we had penciled in. Current contracted capacity is a record 258MW, with potential to grow if a portion of a 125MW+ pipeline is converted. Given PEA’s well-regarded capabilities we believe there is good chance of tender success and upgrade our forecasts accordingly. PEA is a standout performer in the typically volatile resource services space and we maintain a buy call on a revised valuation of $0.82 (prior $0.72).

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Peet (PPC) - Contract Momentum Into 2H

Peet Limited LogoPPC’s 1H17 results were solid, and the business is well positioned for growth into the 2H and FY18. With a large, diversified land bank at a good cost base, PPC is under no pressure to restock, implying management can continue focusing on price, margin and cash flow. The significant exposure to growth corridors on the east coast, where there is still evidence of volume and price appreciation, is offsetting the weaker WA market (which will only deliver ~10% of earnings in FY17). There is upside to our forecasts and we maintain a buy call and a $1.40 valuation.

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