So Boom has an "interesting" history, and that certainly seems to have put a lid on the market valuation. I'll let people Google the details for themselves, but the tl;dr is that they had a former CEO who embezzled over a million dollars (although hey eventually got the money back) and there was also a tragic fatal workplace incident last year that had a $2.3m financial impact.

As Lester said, it's created a bit of a shadow over the company, and you can see that in how it is being valued. Recently they guided for 30c per share in underlying EPS for FY26, which puts them on a forward PE of ~6x (not a typo). Actually, they are well below their NTA of $3.05 per share.

And it's not like the business is shrinking either, with the guidance for the current year representing 37% growth. In fact, in recent years, the business seems to be moving inthe right direction overall:

Now, we are talking about a rather capital intensive operation, that operates in a cyclical space with a large unionised workforce and a bunch of debt, so there are definitely things to watch out for *BUT* if you feel they can sustain a bit of growth for the foreseeable future without any major incidents there could be some potential for a re-rate.

Just on those issues, Lester made the point that most of their work is maintenance in nature. Which is less lumpy and more predictable than new builds. There's also a good degree of diversification in clients and projects which should help smooth things out too.

The debt was restructured a few years back and they sit on a net gearing ratio of 38% at present, which is well below their max threshold of 45% and only just above their target minimum of 35%. I suspect a bit of debt is necessary to make the ROE decent, otherwise you'd have a fairly low return business. Not unreasonable to a certain extent, but something to keep an eye on.

The goal here is all about effective capital management and asset utilisation. If they can lift their return on net assets from ~10% to their target of 15% that'll do a lot to grow earnings, especially if they can maintain their margin discipline, which is something Lester brought up more than once.

The maths all makes perfect sense, but as I said at the end of the chat, it's really all about execution.

I'm always a sucker for a cheap price, and things look really cheap (which is why their share buyback makes so much sense) -- but i'm also mindful that the market isnt always so silly as to walk past a great deal. So there's probably more going on than I am aware of, or what I was able to illicit from Lester. Keen for any perspectives!

btw, here is the transcript