Acrow Formwork and Construction Services (ACF) appears to have very good prospects. The company recently raised $10.5m from institutional and sophisticated investors to fund growth in the Industrial Services and Civil Formwork businesses, with strong demand for the 27.6 million new shares issued at 38 cents per share. This was an 11% discount, but pleasingly for other shareholders there has been some gain in the trading price since the CR announcement.

With ongoing weakness in the high-rise construction market, ACF made strategic acquisitions to focus more on major civil infrastructure opportunities in the eastern states across rail, road, water, energy and defence industries. That move has succeeded with the Federal Government funding major infrastructure projects to provide employment and rebuild the economy. The Bruce Highway upgrade and Sydney Metro Rail project have years to run and ACF has a strong pipeline of projects following recent contract wins.

It is disappointing that ACF was unsuccessful in its $15m tender for the Brisbane Cross River Rail project, but the company is well placed to benefit from other major infrastructure projects in the lead up to the Brisbane 2032 Olympic Games.

ACF has a market cap of $97m, a fully franked dividend yield around 4%, and an ROE around 15%. FY21 guidance is for revenue of $106m (+22%), EBITDA $23.5-24.5m (+21-26%) and underlying NPAT $8.7-9.5m (+10-20%). The company is targeting 20% EBITDA growth in FY22.