LCC Asia Pacific Engineering & Contractors Update 294
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The document is a weekly report on the Australian engineering, contractors, and service providers market, detailing market performance, M&A activities, and notable news events from the week ending February 1, 2019. Key highlights include a 0.7% decline in the Australian market index, acquisitions involving NRW Holdings and WorleyParsons, and various contract awards and developments in the engineering sector. The report also features weekly performance data of specific companies and economic indicators.
LCC Asia Pacific Engineering & Contractors Update 294
- 1. Page 1 / 3 Australian Engineering, Contractors & Service Providers Edition 294 for the week ending 1 Feb 2019 | Published 4 Feb 2019 WWW.LCCASIAPACIFIC.COM IMPORTANT DISCLAIMER: This report has been prepared by LCC Asia Pacific Pty. Limited ("LCC"). The research is based on information obtained from sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made. Source: Thomson Reuters, Company Announcements, LCC research Market Performance – Overview Percentage change Change in basis points Index Week YTD 12 months Fixed Income Yield Week YTD 12 months (Australia) S&P / ASX200 (0.7%) 3.8% (3.7%) (Australia) 2-year gov bonds 1.83% 0.00 (0.08) (0.19) (Japan) Topix (0.1%) 4.7% (16.3%) (Australia) 5-year gov bonds 1.86% (0.01) (0.06) (0.53) (Singapore) FTSE Strait Times Index (0.4%) 3.9% (10.1%) (Australia) 10-year gov bonds 2.21% (0.01) (0.12) (0.59) (Hong Kong) Hang Seng 1.3% 8.1% (14.4%) (South Korea) Kospi 200 1.5% 9.1% (14.3%) Rate Week YTD 12-months (US) S&P 500 1.6% 8.0% (4.1%) AUD to USD 0.7249 0.9% 2.8% (9.8%) (US) Dow Jones Industrial 1.3% 7.4% (4.3%) (UK) FTSE 100 3.1% 4.3% (6.3%) M&A Rumour and Activity The Australian market finished the week 0.7% lower to end at 5863 points. The index edged down as shares in the financial sector closed lower ahead of the release of the banking royal commission report, while the broader market was impacted by weak Chinese manufacturing data. The Australian dollar finished the week 0.9% higher to end at US74.49 following a strong-than-expected inflation data (1.75% for the year), higher iron ore prices (following the Brazil dam disaster) and a dovish commentary from the US Federal Reserve. NRW Holdings Ltd (NWH.AX) announced on 31 January 2019 that it has entered into an agreement with the Administrators of RCR Tomlinson Ltd to acquire the assets of RCR Mining and RCR Heat Treatment for $10 million. The divisions of RCT delivered revenue of circa $110 million in FY18. We think that this is an excellent deal for NRW and note that Andrew Walsh, NRW’s CFO, knows the RCR business extremely well having previously been CFO of that organisation. The Administrators of RCR Tomlinson Ltd announced on 29 January 2019 that it has sold the RCR Laser business unit to Unique Metal Works Pty Ltd for an undisclosed value. The RCR Laser business unit employs approximately 200 employees. WorleyParsons Ltd (WOR.AX) released an update on its acquisition of Jacobs ECR which was announced in October 2018. WOR said that it has received regulatory approval from the European Commission and the Canadian Competition Bureau. The acquisition is still subject to the completion of regulatory approval in South Africa and certain pre-completion restructuring activities within Jacobs. WorleyParsons also said that the acquisition is on target for completion in late March of early 2019. This morning we have had reports from Contractors around Townsville on elements of various mining operations going into standby mode as a result of the weather impacting that region. We will provide any additional information in next week’s report as the situation develops. News Headlines and Key Sector Developments Ticker News/ Event Ticker News/ Event ANG Appointed Ms Rochelle Obelholzer and Ms Sophie Raven as Joint Company Secretaries MLD Entered into a MoU with a subsidiary of Emerald Resources Ltd to supply equipment and contract mining services at the Okvau Gold Project in Cambodia (7-year c.US$220m revenue) ASB Cooperating with US authorities on their investigation into the LCS program NMS Reported 9M19 results – with revenue of S$38.5m (up 37% from pcp) ASB Delivered the largest commercial ferry (by volume) the Company has ever built in its shipyard ($109m value) SND Expects to announce EBITDA of $0.0m to $0.5m for H1FY19 (as a result of further client delays) BOL Extended its finance facilities with its lender of improved terms (savings of c.$250k p.a.) SRG Entered into a 50/50 JV with WBHO Infrastructure Pty Ltd to deliver the 18-month, $41.6m contract to deliver the Wanneroo and Ocean Reef Road Interchange Project (awarded by Main Roads Western Australia) BPP On track to exceed FY19 annual revenue guidance of c.$7m WOR Awarded a 4-year EPCM contract by Newmont Mining Services Pty Ltd for the underground mine operations in the Tanami Desert in the Northern Territory, Australia CIM Secured a $277m 2-year extension to its contract with Sydney Trains for the delivery of maintenance and logistics services for a section of Sydney’s metropolitan passenger rail fleet
- 2. Page 2 / 3 Australian Engineering, Contractors & Service Providers Edition 294 for the week ending 1 Feb 2019 | Published 4 Feb 2019 WWW.LCCASIAPACIFIC.COM IMPORTANT DISCLAIMER: This report has been prepared by LCC Asia Pacific Pty. Limited ("LCC"). The research is based on information obtained from sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made. Ticker Company Name Market Cap (A$ m) Open Price (A$) Close Price (A$) Week High (A$) Week Low (A$) Volume Trend EV/ EBITDA EV/ EBIT Engineering Services AJL.AX AJ Lucas Group Ltd 135 0.17 0.18 0.18 0.16 ▲ 16.1% 13.7x 22.0x BOL.AX Boom Logistics Ltd 79 0.17 0.17 0.17 0.16 ▲ 3.0% 5.5x 41.1x BPP.AX Babylon Pump & Power Ltd 7 0.02 0.02 0.02 0.02 ▲ 5.3% n.m. n.m. BSA.AX BSA Ltd 110 0.25 0.26 0.25 0.24 ▲ 4.1% 7.1x 12.0x CDD.AX Cardno Ltd 424 0.96 0.94 0.95 0.93 ▼ (1.6%) 8.0x 11.2x CIM.AX CIMIC Group Ltd 14,501 45.90 44.58 45.40 44.35 ▼ (2.2%) 8.1x 11.8x CVL.AX Civmec Ltd 208 0.49 0.49 0.50 0.49 — 0.0% 6.3x 8.0x DCG.AX Decmil Group Ltd 171 0.73 0.72 0.72 0.71 ▲ 1.4% 28.3x 60.1x DOW.AX Downer EDI Ltd 4,276 7.28 7.19 7.17 7.08 ▼ (1.2%) 7.8x 16.5x EGN.AX Engenco Ltd 170 0.51 0.54 0.54 0.51 ▲ 0.9% 9.7x 12.8x FWD.AX Fleetwood Corp Ltd 179 1.90 1.89 1.85 1.78 — 0.0% 7.1x 9.5x GCS.AX SRG Global Ltd 208 0.47 0.47 0.49 0.47 ▼ (1.1%) 7.7x 9.3x GNG.AX GR Engineering Services Ltd 179 1.16 1.16 1.16 1.14 ▲ 1.8% 9.0x 9.7x LCM.AX LogiCamms Ltd 12 0.13 0.14 0.13 0.13 ▲ 7.7% 8.0x n.m. LLC.AX LendLease Group 6,845 11.99 12.14 12.16 11.96 ▲ 1.1% 10.9x 12.8x LYL.AX Lycopodium Ltd 193 4.80 4.85 4.95 4.80 ▼ (1.8%) 3.5x 3.6x MND.AX Monadelphous Group Ltd 1,438 15.12 15.26 15.11 14.75 ▼ (0.4%) 10.8x 12.7x OTR.AX Onterran Ltd NULL 0.32 0.32 0.32 0.32 — 0.0% n.m. n.m. PGX.AX Primero Group Ltd 65 0.40 0.43 0.42 0.40 ▲ 7.5% 7.9x 8.8x RDG.AX Resource Development Group Ltd 16 0.03 0.03 0.03 0.03 — 0.0% 5.2x n.m. SND.AX Saunders International Ltd 41 0.39 0.40 0.39 0.39 ▲ 2.6% n.m. n.m. SSM.AX Service Stream Ltd 789 1.92 1.97 1.95 1.88 ▲ 3.1% 10.9x 12.7x SXE.AX Southern Cross Electrical Engineering Ltd 139 0.60 0.59 0.60 0.58 ▼ (1.7%) 4.4x 7.1x SOP.AX Synertec Corporation Ltd 10 0.04 0.05 0.05 0.04 ▲ 2.3% n.m. n.m. TPP.AX Tempo Australia Ltd 36 0.14 0.15 0.15 0.14 ▲ 7.1% n.m. n.m. VMG.AX VDM Group Ltd 9 0.00 0.00 0.00 0.00 ▼ (25.0%) n.m. n.m. VMX.AX Valmec Ltd 32 0.26 0.26 0.26 0.26 — 0.0% 4.3x 5.9x VRS.AX Veris Ltd 35 0.10 0.10 0.10 0.09 ▼ (5.0%) 5.4x 22.2x WOR.AX WorleyParsons Ltd 6,501 13.82 14.11 13.82 13.42 ▲ 0.3% 20.2x 25.2x Mining Services ASL.AX Ausdrill Ltd 866 1.31 1.27 1.30 1.26 ▼ (4.9%) 8.4x 19.0x ANG.AX Austin Engineering Ltd 113 0.20 0.20 0.20 0.19 — 0.0% 4.8x 7.5x BLY.AX Boart Longyear Ltd 131 0.00 0.01 0.00 0.00 ▲ 11.1% 11.5x 34.2x EHL.AX Emeco Holdings Ltd 753 2.34 2.33 2.37 2.24 ▼ (4.1%) 7.4x 14.5x IMD.AX Imdex Ltd 433 1.11 1.15 1.15 1.11 ▼ (0.9%) 10.0x 14.5x MAH.AX Macmahon Holdings Ltd 519 0.22 0.24 0.23 0.22 — 0.0% 4.4x 13.2x MIN.AX Mineral Resources Ltd 2,895 15.30 15.40 15.72 15.16 ▼ (0.3%) 5.8x 7.5x MLD.AX MACA Ltd 260 1.02 0.97 0.99 0.95 ▼ (2.0%) 3.9x 43.4x MSV.AX Mitchell Services Ltd 78 0.05 0.05 0.05 0.04 — 0.0% 17.6x n.m. MYE.AX Mastermyne Group Ltd 88 1.05 0.87 1.02 0.85 ▼ (14.7%) 5.6x 10.5x NWH.AX NRWHoldings Ltd 748 1.83 1.99 1.92 1.82 ▲ 9.3% 8.8x 19.0x RUL.AX RPMGlobal Holdings Ltd 120 0.56 0.56 0.55 0.54 ▲ 1.8% 22.1x 98.9x SWK.AX Swick Mining Services Ltd 52 0.23 0.23 0.23 0.23 — 0.0% 4.2x 1,436.4x Marine Services ASB.AX Austal Ltd 706 2.09 2.00 2.08 1.99 ▼ (6.1%) 7.28 11.63 MCE.AX Matrix Composites & Engineering Ltd 37 0.38 0.37 0.38 0.37 ▼ (3.9%) n.m. n.m. MRM.AX MMA Offshore Ltd 142 0.16 0.17 0.16 0.16 ▲ 3.1% 17.3x n.m. NMS.AX Neptune Marine Services Ltd 12 0.20 0.20 0.22 0.20 — 0.0% n.m. n.m. VEE.AX VEEM Ltd 70 0.50 0.54 0.54 0.50 ▲ 8.0% 15.8x 22.7x ZGL.AX Zicom Group Ltd 15 0.08 0.07 0.08 0.07 ▼ (10.3%) n.m. n.m. Facilities Management & Services AEI.AX Aeris Environmental Ltd 26 0.15 0.14 0.15 0.12 ▼ (6.7%) n.m. n.m. ALQ.AX ALS Ltd 3,612 7.12 7.42 7.27 6.94 ▲ 2.5% 13.1x 16.8x GMG.AX Goodman Group 21,077 11.80 11.62 11.97 11.57 ▼ (2.2%) 60.0x 60.0x HIL.AX Hills Ltd 42 0.18 0.18 0.18 0.18 — 0.0% 6.0x 18.2x MIL.AX Millennium Services Group Ltd 12 0.27 0.26 0.27 0.26 ▼ (15.0%) 4.9x n.m. ENE.AX Enevis Ltd 19 0.28 0.28 0.28 0.28 — 0.0% n.m. n.m. TPS.AX Threat Protect Australia Ltd 24 0.16 0.18 0.18 0.16 ▲ 5.9% 262.1x n.m. UBN.AX Urbanise com Ltd 27 0.04 0.04 0.04 0.04 ▼ (2.5%) n.m. n.m. Source: Thomson Reuters, LCC research Weekly change (%)
- 3. Page 3 / 3 Australian Engineering, Contractors & Service Providers Edition 294 for the week ending 1 Feb 2019 | Published 4 Feb 2019 WWW.LCCASIAPACIFIC.COM IMPORTANT DISCLAIMER: This report has been prepared by LCC Asia Pacific Pty. Limited ("LCC"). The research is based on information obtained from sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made. Investment Banking Services LCC Asia Pacific Suite 3, Level 39, Aurora Place 88 Phillip Street Sydney NSW 2000 Australia National: 1 800 LCC 888 International: + 61 2 9262 2121 AFSL 278 054 A.C.N. 105 807 645 ▪ Mergers, Acquisitions & Divestments ▪ Equity Capital & Debt Capital Advisory ▪ Balance Sheet Review & Optimisation ▪ Project & Infrastructure Financing ▪ Yellow Metal Financing ▪ Strategic Corporate Investment Planning & Implementation ▪ Consortia Development & Deal Structuring ▪ Joint Venture Design, Partner Selection & Commercial Structuring ▪ Shareholder Disputes & Activism Strategic Advisory Consulting ▪ Complex Negotiation Planning & Execution Including For Commercial Contracts & Dispute Resolution ▪ Financial Modelling, Scenario Analysis & Business Case Development ▪ Analysis Of Commercial Arrangements Including Tolling, “Services For Equity” & Royalty Agreements ▪ Tender Research & Preparation Support ▪ Bespoke Industry Specific Research & Data Analysis, including “Benchmarking” ▪ Domestic & Cross Border Market Entry & Exit Planning & Analysis ▪ Mining Technology Research, Recommendations & Implementation ▪ China Belt & Road Initiative Strategies & Responses For a confidential discussion on how we can help your company achieve its ambitions drop us a line at [email protected] Founded in 2004, LCC Asia Pacific is an award-winning boutique investment banking & strategic advisory firm that specializes in the engineering & contracting sector as well as general & specialised services – including mining, drilling, energy & oilfield (onshore & offshore) We help our clients with both investment banking & strategic consulting engagements in areas of work including Australian & Asian Focus Global Capabilities & Thinking