Results out today. Small miss on revenue but beat across the bottom line comped to prospectus. Re-affirms FY20 guidance with 4 new plants on track to be delivered. Plant 3 committed to mining/water sector work to diversify customer base. Will be a little while longer to see some action here as they deliver on expansion objectives.

Further thoughts from research.

Came across this preso doing a basic level run down of using Tubi. 

https://csdservices.com.au/wp-content/uploads/2018/05/CSD-TUBI-High-Level-General-study-SFIS-Pipe-Schedule-V1-Project.pdf?

Independent group running the numbers highlighting that less welds alone ?can save around 20% from labour wages (pipe length dependent) but that savings do go beyond that, including less cost for people beyond wages and less hire time for welding equipment. Does miss the obvious one of less trucking costs given a truck of PE resin bead would replace multiple trucks of pre-fabbed pipe. 

A similar brief was written up for stage one of the Central Plains Irrigation Scheme. However, stage 1 pipe was provided by a local NZ mob ( who built a mobile plant (a mini local plant on a slab with a shed), who went broke after the job was done. Not quite the same but still highlighted the benefits of on-site production that 2BE offers. 

https://www.waternz.org.nz/Attachment?Action=Download&Attachment_id=426?

Oddly enough, Steel & Tube bought out the defunct Aqueduct NZ that did the mobile extrusion for Dow for stage 1 but don't seem to have done anything with it. FBU tried to buy out Steel & Tube in October 2108 but moved on then afterwards signed a deal with 2BE via iplex.

https://www.stuff.co.nz/business/68901957/?

According to this post from KTM who floated 2BE, the ultimate buyer of pipeline ?from MPS is seemingly Exxonmobil. If so, they have some freaking big plans in the Delaware basin of the Permian. Triple in five years. Given the contiguous landholding, they a running a manufacturing process. Will need a tonne of pipe and would infer MPS will need more than 2 plants in time. 

https://www.linkedin.com/pulse/going-moon-asx-listing-tubi-martin-rogers/?

https://corporate.exxonmobil.com/-/media/Global/Files/investor-relations/other-investor-presentations/2018-Upstream-Permian-Spotlight.pdf?
 

Innovative mobile plant that produces HDPE pipe. Benefits of mobile is that longer pipes can be made at site, reducing welds. This saves cost and reduces the number of potential break points in the pipeline. From logistics side, easier and cheap to ship resin than pre-fabed pipes. Typically road transport is 50 feet lengths, Tubi plant can make pipes up to 3 kms. Target end use is for large pipeline projects in remote areas (i.e. kms of pipes needed to develop a shale or CSG field, water and sewage for urban development). Plant has been validated by large industry players such as DOW and FBU (Iplex subsidiary to get first plant in FY20). They currently have one plant running with a US player providing pipelines solutions to the US shale industry. Plant running near full tilt for over a year with this customer who is buying a second plant. Contracts signed to run 2 more plants this year, 2 more on top of this to be built in FY20 as well but not yet contracted. Contracts are take-or-pay. By FY20 end, expectation for 5 plants running. Gives a platform for the company to grow at 100%+ p.a. for next 2 to 3 years. Oddity of the IPO is that it was just a founder partial selldown rather than capital injection. Capital was injected in a pre-IPO round in April 19 at 20cps (same as IPO). Accounts show they essentially self-fund growth. Revenue is mostly made from producing pipes under contracts with customers (Iplex is licence and service agreement so paid for plant build). Stock is tightly held. Catalysts are meeting FY19 prospectus numbers, confirming delivery of second MPS plant and Iplex plant (Dec 19 qtr), signing contracts for plants 4 and 5 (2H FY20). Prior to IPO, new Texas based CEO was brought on. Pipeline industry veteran and key to driving contracts there. Seems like a case of right person in the right spot for selling the Tubi plant. Biggest risk that is most obvious is that the product never really takes off and seems super niche. Would be harder to break into this market as customer and supplier relationships are probably pretty tight (i.e. buy from who you know well), although the biggest way to overcome this is partner with pipeline producers who would use it to compliment their supply (i.e. Iplex, MPS, etc…). Valuation is undemanding and c heap if they can hit FY20 metrics and sustain growth into Fy21 &22.