Stealth Group Holdings Ltd

ASX:SGI

Stealth Group Holdings Ltd

ASX:SGI
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$0.415 (-3.5%)
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#1
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Reports (5) My Report Forum Investors
Forum Topics SGI SGI Record quarter

Pinned straw:
Strawman
Added 2 years ago

3rd quarter sales hit $29.2m, up 12.6%. For the first 9 months of the year, sales are up 17.4%. Both are records for the company.

If they achieve the same result next quarter, or we just pro-rata the first 9 months, it puts Stealth at around $110m in FY23 sales for continuing operations.

36% of revenue comes from mining, resources and infrastructure, which the company is seeing "ongoing high demand".

Inflation still a challenge, but price increases is expected to contribute to an increase in profit.

The Skipper and United Tools acquisitions are still yet to realise "significant" cost synergies.

The company has previously said it expects margins to improve -- and this is a big part of the investment thesis -- but if you assume a net margin of just 1% in FY23, the forward PE is around 10. Not bad for a company enjoying double digit revenue growth.

See full ASX announcement here.

Disc. Held.
Slideup
Added 2 years ago

Thought I would try out the fancy new comment feature

@Strawman The part that jumped out to me as really positive and should help to improve margins was this table. The number of daily transactions is going up (18%) and the size of each sale per employee is up 15%. Definately moving in the right direction.

Still not really convinced that >95% of their products are categorised as non-discretionary. I guess the definition of this category changes depending on the severity of the downtown!

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Strawman
Added 2 years ago

Excellent point @Slideup

My take on the "non-discretionary" claim is that these products are indeed, more or less, non-discretionary while ever their customers are completing projects. But, of course, projects get halted, or simply completed, all the time. And many of these customers belong to relatively cyclical sectors. So Stealth is very much exposed to the underlying levels of activity in areas such as mining, construction, infrastructure etc.

I wouldn't consider this a "recession proof" business at all, but I could see some support from government stimulus in the form of infrastructure projects if and when there was a nasty recession.

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