We visited the facilities of Civmec Ltd (Civmec) in Henderson, Perth, Western Australia last week. Listed on the SGX since Apr 2012, Civmec is an integrated construction and heavy engineering services provider to the oil and gas, mining and other industries. Civmec possesses strong capabilities that position it well to ride on Australia’s energy boom. It is also further expanding its production facilities. We compared Civmec against a broad segment of construction and infrastructure companies based in Australia. With an estimated 3-year EPS growth of 205%, valuation seems reasonable with a forward P/E of 14.1x, based on an annualised FY12 EPS. We DO NOT have a rating on Civmec.
Integrated construction and heavy engineering services provider
We visited the facilities of Civmec Ltd (Civmec) in Henderson, Perth, Western Australia last week. Listed on the SGX since Apr 2012, Civmec is an Australian-based integrated construction and heavy engineering services provider to the oil and gas, mining and other industries. Services that the group provides include fabrication, site civil works, pre-cast concrete and maintenance services. Key customers include the Australian-based operations of international corporations.
Good facilities and further expansion planned
Civmec claims it has the largest under-cover sea-front fabrication and modular assembly workshop in Australia. This enables the group to fabricate large integrated and modularised structures undisrupted by weather conditions, allowing it to secure contracts of higher values. Not resting on its laurels, the group intends to acquire additional production facilities and equipment so as to increase its capacities in Structural, Mechanical and Piping (SMP) installation and its site civil works divisions. A new 6,000+ sqm corporate office is also slated for completion in 1Q13.
Rapid growth, reasonable valuation
We compared Civmec against a broad segment of construction and infrastructure companies based in Australia. Compared to its peers, Civmec appears to be growing at a very fast pace, with an estimated 3-year EPS growth of 210%. However, this can be partially attributed to a low base effect. Looking forward, the rapid growth may continue as the group utilises its IPO proceeds in expanding its workforce and growing its SMP business. Valuation seems reasonable with a forward P/E of 14.1x, based on an annualised FY12 EPS, against an industry median of 11.8x.
Not Rated
We DO NOT have a rating on Civmec.
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