@Bear77 great summary. I was waiting for today’s update and have just initiated at 2% RL position at $1.05, and also placed an order on SM.

While I’d have liked to have seen more progress on order book, it has broadly held steady since the last report.

I agree with your remark about profitability. This demonstrates discipline I. Not bidding down to win work. The significant step up in tenders will, in due course, flow through. Just on a statistical basis … these folk know their segment … and so I expect to see orders progress over the next year.

Pipeline is also encouraging, but let’s face it, you can make that number whatever you want.

i won’t explain more as we had a good discussion about this one several weeks ago.

I have another 2% to deploy in RL, but will wait to see the price action through today.

(As I’m at almost zero cash in RL, paid for by starting to monetise $ALU, offloading $RFT for its tax loss, and some $IVV tracker.)

Held in RL, order in in SM

20-May-2024: Additional: From Duratec's announcement today: [green trend line added by me]

Looking back at some of @mikebrisy 's work here:

Today's comment from Duratec in their announcement: EBITDA margins increasing due to strong project performance across all sectors

We have discussed here previously about the potential of their pipeline (green columns) to be a leading indicator of Tender Activity (orange), and an even closer relationship between tender activity and subsequent order book/revenue (blue) in the following years.

Today they have said: Duratec maintains a healthy orderbook of $377m with the Company continuing to secure small to medium contracts as well as annuity style projects in line with historical win rates. The Pre-Contracts team continue to strengthen Duratec’s pipeline of work and these efforts have contributed to a 40% increase in tendered work to $1.47b and a $200m increase in the pipeline to $3.95b.

This compares to their H1 results:

So Order Book is slightly lower now - @ $377m, which would be due to those delayed contract awards they mentioned (the cause of the revenue guidance reduction). However Tenders are now $1.47 billion and the Pipeline is now $3.95 billion. I believe tenders are more important than pipeline in terms of being an indicator of future contracted work (order book) - as long as they maintain their win rates (winning work they tender for). Therefore while the order book (and revenue guidance) reduction is not welcome, it's not entirely unexpected in this industry where contracts don't all flow at a nice steady pace all of the time, the 40% increase in tendered work to $1.47 billion is a good result, and bodes well for FY25 and FY26 revenue and earnings. Improved margins are of course always positive, so that was good to read today also.

Thanks Mike. I just used two of your charts in another post here. I agree that Pipeline is a very relative number - and can't be independently verified at all - so isn't a particularly reliable number to use as a leading indicator unless we can see a consistent relationship between the Pipeline and the Tenders in subsequent years, but, as I said, I feel the relationship between Tenders and then Order Book in the following year is more important - and probably more reliable, as long as they maintain their win rate of course.

Good to hear you're onboard DUR as well now. Interesting that despite the SP falling by around -6% today, DUR is still trading at levels slightly above where they have traded for most of the past 4 weeks - except for the last three days of last week when they had a little spike up.

@Bear77 I tweaked the numbers this morning from the release, restating the % revenue on the new guidance midpoint.

You can see order book is reasonably stable (although it would be good to see it back up towards 100%). But the positive is the large step up in tenders, pretty much back to 2021 levels in terms of % of revenue. As you say, this bodes well for order book in FY25.

Hard to understand why there'd be a selloff from these levels. Afterall, at midpoint revised guidance they'll do +13% revenue and +25% EBITDA y-o-y, and the P/E is now down to 9.8 (FC 2024),

Basically, looks like investors reacting to the revenue downgrade. Hot guidance, which is then under-delivered leaving a solid result, offers a great buying oportunity!!

I'm glad to have waited from when we were discussing this a couple of months ago, as the market has offered it to me 15% cheaper than what I already considered good value.

I consider fair value to be in the range $1.50 - $1.70 (in line with the one analyst report), so there is the potential for a nice return over the next year or two.