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#Bull Case
Last edited 4 days ago

BSA a fairly new addition for me, attatched below is an excerpt from Naos monthly update today. They own 29% of this and have still been topping up recently.

Lanyon Asset own 22% and the Lanyon Portfolio manager David Prescott also has a seat on the board as a director now. I like these scenareos as you can be sure that any decisions to be made, he will be pushing for the best out come for shareholders rather than managment.

Naos - Firstly, BSA made two significant releases that we believe provides the company with an excellent base of work with tier-1 clients for the foreseeable future. Most significantly BSA was able to secure a renewal contract with NBN for up to 8 years commencing in early CY21. Based on the initial contract revenue figures, BSA has secured a greater share of the overall NBN maintenance work due to what we believe has been high levels of service and customer satisfaction, which has allowed BSA to gain market share from far larger competitors. Pleasingly, BSA also announced in the month that they had successfully secured a five-year contract with Telstra, focusing on property and telecommunication asset works in Tasmania and Victoria. In addition to these two contract wins, over the course of CY20 BSA has also been able to secure a new contract withFoxtel as its sole contract provider and successfully move into the mobile/wireless space with clients such as the NSW Telco Authority. If BSA can continue to innovate in the way it meets and exceeds its clients requirements then we believe BSA has the potential to be a >$650 million revenue business.

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#BSA vs SSM re- nbn work
Added 4 weeks ago

16-Dec-2020:  BSA secures nbn Contract     [BSA up +5.17% today]

See also:   Service Stream: SSM secures multi-year Unified Operations Agreement with NBN     [SSM down -12.13% today].

Why?  One up, one down?  Because back in August, BSA couldn't get a guernsey, however SSM and DOW were proudly announcing 4 year contracts with 2 x 2 year extension options (same as today's announcements) with the nbn for basically all of Australia - except Tas.  DOW had WA, SA & NT, while SSM had Victoria, NSW, Queensland and the ACT.  BSA had been given a 1 year extension on an expiring contract, but were still trying to negotiate a longer term deal.

Today, DOW have announnced nothing, SSM have announced they have been allocated regions across Queensland, SA, NT and WA, but no mention of NSW or Victoria.  BSA have announced that they have been allocated regions across NSW and Victoria.  

I'm betting that the market is thinking that SSM have lost NSW and Victoria to BSA, however that's not the way I'm reading it.  The contracts that DOW and SSM announced in August were both 4 year contracts with extension options beyond 4 years.  It's only been 4 MONTHS.  I think the key term to note here is "regions".  For instance, one company could have Melbourne and Sydney, i.e. the greater metro areas of each city, while the other company could have the rest of each state, i.e. the rural areas and smaller cities.

What I'm reading is that BSA have finally managed to secure a longer term contract with nbn, but only for certain regions within 2 states.  However, SSM have now signed an ADDITIONAL contract with nbn which has given them work in WA, SA & NT plus additional work in Queensland, all in addition to the nbn work they will continue to do in NSW and Vic.  In fact, in today's announcement by SSM, they said:

"Following the recent signing of the Unify Networks agreement in August across a similar term, Service Stream will effectively be providing nbn with operations and maintenance support across all mainland states and territories under either the Unify Networks or Services agreements. We look forward to continuing to support nbn’s maintenance programs for many years to come."

So, they have NOT lost NSW and Vic.  I do NOT currently hold SSM or BSA (having owned both previously), but I do hold DOW shares.  If I was going to buy BSA or SSM, I would prefer to buy SSM at this point, as long as I could get them at a good price.  I consider Service Stream to be a far superior company to BSA.  I think SSM will recover today's -12% SP loss over the coming days as the market realises that this announcement by SSM was positive, not negative, and they simply have MORE nbn work now than they did before.

It's also positive for BSA of course, but the reality is that BSA have now secured ongoing nbn work (over at least the next 4 years) in two of Australia's states (albeit the two with the largest population), while SSM has contracts for the same nbn work in EVERY Australian mainland state and territory (everywhere but Tasmania).  And SSM is a larger, stronger, and better run company, in my opinion.

Further Reading:

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#DOW & SSM get NBN work
Last edited 5 months ago

31-Aug-2020:  Service Stream (SSM):  SSM secures multi-year Unified Operations Agreement with NBN

See also:  Downer EDI (DOW):  31-Aug-2020:  Downer awarded new NBN contract

See also:  BSA Ltd (BSA): from their FY2020 Investor Presentation (24-Aug-2020):  Page 4 ("Full Year Highlights"), right side ("Order Book"):

  • Foxtel’s preferred single national delivery partner – 3 year contract as sole provider;
  • Negotiating with nbn to extend OMMA contract through to June 2021 (with further 6 month nbn option);
  • Fire Build – strong order book with a number of contract wins in the period including WestConnex link 3A, Sydney Football Stadium, Gold Coast Airport and Sydney Metro; and
  • National maintenance contract awards for Aldi and 7-Eleven with strong forward demand.

So, both Downer (DOW) and Service Stream (SSM) have today BOTH announced multi-year (4+2+2) Unified Field Operations (Networks) Agreements/Contracts with NBN.

Downer's agreement is valued at ~$320 million over the  maximum term of eight years.  Downer will provide services including network restoration, copper rehabilitation, alternate power system activities, network performance and capacity enhancement, urgent field service work and site maintenance across Western Australia, South Australia and the Northern Territory.

Under their new NBN agreement, Service Stream will continue to be responsible for performing operations and maintenance activities across core network technologies, including Fibre to the Node (FTTN), Fibre to the Premise (FTTP), Fibre to the Basement (FTTB) Fibre to the Curb (FTTC) and Hybrid Fibre Coax (HFC) as well as other technologies which may be introduced in the future.   The NBN has initially awarded Service Stream works across Victoria, New South Wales, Queensland and ACT, with additional works able to be allocated in other regions at nbn’s discretion. 

So, both DOW and SSM have today announced between 4 and 8 years more work for the NBN, and together they cover every Australian state and territory except Tasmania.  

BSA have announced nothing today, and I am of the opinion that they could well be left out in the cold in terms of NBN work going forwards.  They still have Foxtel, but with the huge increase in cheaper streaming services (Stan, Fetch, Netflix, etc.) now available, Foxtel is not growing, they are shrinking, so that Foxtel work is unlikely to provide a growing revenue stream into future years for BSA, in my opinion.  BSA still have their "Fire Build" work, but that tends to be project based, rather than recurring revenue.  They also have national maintenance contracts with Aldi and 7-Eleven going forwards, but they need more.  I have decided to cut BSA loose today, so I've just sold all my BSA shares - at 29 cps.  It was a relatively small position anyway, and I think there are better opportunities elsewhere.

[I don't own any SSM.  I do hold Downer (DOW) in my SMSF.]

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#ASX Announcements
Added 2 months ago


Revised Chairman's and CEO's Addresses to AGM

There wasn't much new here. Although t is interesting to note that on slide 19 they indicate that they are working on an IoT Building Management Solution in partnership with Software AG.  I hadn't see that before.  It will be interesting to see if that pans out. 


I hold BSA

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#Broker/Analyst Views
Last edited 2 months ago

12-Nov-2020:  Sequoia Financial Group: BSA Limited (BSA) - Upgrade to Buy:  Improved positioning in Wireless; Covid recovery expected in APS

Analyst:  Wayne Sanderson – Head of Research,, +61 400 434 548


BSA Limited (BSA) is a Sydney-based technical services contracting company operating nationally. 2 main segments:

  1. Communications & Utility Infrastructure (nee BSA Connect) (68% of FY20 Ebitda) – Large field force of technicians /contractors serving the Telecommunications sector (NBN, Optus, Foxtel etc.).
  2. Advanced Property Solutions (merger of BSA Maintain – Commercial building maintenance including fire, HVAC (heating, ventilation and air conditioning), electrical, plumbing and general; and BSA Build/ Fire – Technical design and construction of fire suppression and fire detection systems in commercial buildings and motorway tunnels. Project based.

What has changed?

  • Strategic acquisition of Catalyst One Pty Ltd – for $2.0m cash and up to $3.5m 2-yr earn-out. This provides BSA with a strategic entry into the Wireless Telecomms segment to complement BSA’s Fixed Line Telecomms services business.
  • Further extension of NBN OMMA contract by 6 months to 30 June 2021, with an option for NBN to extend for a further 6 months to Dec 21. Possible new NBN work to be allocated.

FY20 Result ahead of our forecasts

  • BSA reported adjusted NPAT of $9.9m for FY20 (v $12.8m), down 23%. However, this was ahead of our $7.4m downgraded forecast.
  • Revenue was $490m (v $470m) up 4.4% and 2% ahead of our $483m forecast.
  • Ebitda was $25.9m (v $24.6m) +5.2%, 17% ahead of our forecast of $22.1m.
  • Abnormal / significant items of $2.1m ($2.9m pre-tax) and losses on Discontinued division $8.8m (HVAC Build) resulted in a Reported Net Loss of $1.0m (Our forecast $0.9m Loss).
  • EPS (adjusted) was 2.3 cents (-23%), ahead of our 1.7c est.
  • DPS was 1.0 cent fully franked (v 0.5c ff) signalling the Board’s confidence in the company (43% pay-out rate).

Change in estimates

We have trimmed our FY21 EPS forecasts by 2%, but upgraded FY22 by 22%. We expect Communications & Utility revenue to be stable (new work to offset expected NBN decline). Further contract wins or acquisitions could provide upside. We expect a strong recovery from the Covid-19 impact on the APS maintenance division in 2H21 (particularly retail and tertiary education).

Recommendation & Opinion

Our revised 12-mth price target is $0.33 (was $0.31) due to the Catalyst ONE acquisition and improved prospects in Wireless / 5G. This includes a 10% “positioning premium” as BSA looks well placed to grow in large Telecomms and Property Maintenance sectors.  We upgrade to BUY from Accumulate.

--- click on link above for the full Sequoia report on BSA ---

[Bear77 note: I did hold BSA, but sold out earlier this year to rotate those funds into a different company that looked like a better opportunity to me.  I do still keep an eye on BSA however.]

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#FY20 FY Results
Last edited 5 months ago

24-August-2020:  Annual Report to shareholders   plus   Investor Presentation

The turnaround continues.  It's going to take another year or two, but they have some small-cap fundies on-board (NAOS with 25.6% & Lanyon with 21.8%, plus Wentworth Williamson/Sandhurst Trustees with 5.11%) plus Bruce Gordon (Birketu/WIN Corporation, with 16.91%) - who are obviously prepared to back this BSA management team to turn this thing around.  Their recurring revenue is now up to around 80% of all of their revenue, and they have divested their HVAC Build Major Projects division - being an area where they were getting themselves into trouble in prior years.  There is still plenty of room for performance and profitability improvement - and I think we're going to see that over the next 24 months.  I'm happy to continue to hold BSA.

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#NBN OMMA contract extension
Last edited 3 months ago

15-Oct-2020:  Extension of nbn OMMA Contract

BSA secures 6-month extension of nbn OMMA contract

Sydney, 15 October 2020 : BSA Limited (ASX:BSA) is pleased to announce today that it has secured an extension to its Operate and Maintain Master Agreement (OMMA) contract with NBN Co (nbn) for 6 months to 30 June 2021 with an option for nbn to extend for a further six months to December 2021.

BSA will continue to provide nbn with a range of activation and assurance services to its Fibre to the Premise (FTTP), Fibre to the Node (FTTN), Fibre to the Basement (FTTB) Fibre to the Curb (FTTC) and Hybrid Fibre Coax (HFC) network infrastructure. The extension will be on similar commercial terms to the existing contract.

BSA Managing Director Tim Harris said, “We are very pleased to extend our long term collaborative partnership with nbn and to continue to provide a market leading customer experience in connecting Australia to the National Broadband Network.

We look forward to working through nbn’s procurement process to support a long-term agreement being secured beyond this current extension.”

[I no longer hold BSA shares.  I note that both Service Stream (SSM) and Downer EDI (DOW) announced recently (on 31-Aug-2020) multi-year (4 years with 2 x 2 year extension options, for a max of 8 years) Unified Field Operations (Networks) Agreements/Contracts with NBN.  DOW's agreement is valued at ~$320 million over the  maximum term of eight years.  Downer will provide services including network restoration, copper rehabilitation, alternate power system activities, network performance and capacity enhancement, urgent field service work and site maintenance across Western Australia, South Australia and the Northern Territory.  Under their new NBN agreement, Service Stream will continue to be responsible for performing operations and maintenance activities across core network technologies, including Fibre to the Node (FTTN), Fibre to the Premise (FTTP), Fibre to the Basement (FTTB) Fibre to the Curb (FTTC) and Hybrid Fibre Coax (HFC) as well as other technologies which may be introduced in the future.   The NBN has initially awarded Service Stream works across Victoria, New South Wales, Queensland and ACT, with additional works able to be allocated in other regions at nbn’s discretion.  So, both DOW and SSM have announced between 4 and 8 years more work for the NBN, and together they cover every Australian state and territory except Tasmania.  By contrast, almost 7 weeks later (today), BSA have announced a 6-month extension to their current NBN OMMA contract to the end of the current FY, with a further 6-month extension option (these options are all at the sole discretion of NBNCo).  BSA are clearly not the NBN's preferred contractor here.  While BSA have some so-called "smart money" on their share register, BSA are small, have performed quite poorly compared to their industry peers, and are usually quite illiquid.  I believe there are better options out there than BSA at this point.]

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#Acquires Catalyst ONE
Added 3 months ago

08-Oct-2020:  BSA Acquires Catalyst ONE

[I am not currently holding BSA shares, but I have held them previously on a couple of occasions.]

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#Trading Update
Last edited 7 months ago

19-June-2020:  Trading Update

BSA Limited (ASX: BSA) wishes to further update the market on trading activities and strategic initiatives. 
Financial Year Profitability 
For the financial year ending 30 June 2020, we expect revenue from continuing operations to be in the range of $475m to $485m, compared to $469.7m for the year ended 2019.  We expect reported EBITDA from continuing operations to be in the range $22m-$23m(*1) million compared to $21.8m for FY19. 
We are pleased to report we have seen continued resilient performance by our Connect (58% of BSA H1 20 revenue) and Fire Build (19% of H1 20 revenue) business units but have experienced some slow down and deferral of discretionary work within our Maintain (23% of H1 20 revenue) business unit. The slowdown in the Maintain business has primarily been due to weakness in the tertiary education, transport, and retail sectors.  We expect demand to return through FY21 as client confidence returns and the requirement for well-maintained assets increases across many sectors. 
We are also pleased to report that to date, given our tight cost control and focus on working capital, we have retained a strong cash position and have not seen any material impact on receivables or other working capital as a result of the pandemic. 

*1 (Note 1):  Underlying EBITDA from continuing operations (excluding AASB16 and significant one-off costs) is expected to be in the range of $20m-$22m.
Interim Dividend 
On 25 March 2020, BSA advised that it had made the decision to defer payment of its interim dividend for the half year ended 31 December 2019 until 27 October 2020 given the uncertainty caused by the onset of the COVID-19 pandemic.   
Given solid trading, improved certainty and BSA’s proactive focus on managing working capital, BSA is pleased to announce that the interim dividend of 0.5 cents per share, fully franked, will now be paid earlier than expected on 8 July 2020 to shareholders on the register at Friday 27 March 2020. 

Dividend Policy  
BSA acknowledges the importance of paying regular, reliable dividends to its shareholders.   BSA is focused on growing revenues and operating profits in a controlled manner whilst maintaining a tight focus on working capital to deliver strong levels of free cash flow.  
BSA is pleased to advise that its new dividend policy is to target a payout ratio of between 40-60% of earnings per share, paid as both an interim and full year dividend.   BSA expects that all near term dividends will be fully franked. 
The Board believes that the 40-60% payout ratio strikes the right balance between rewarding shareholders with a reliable income stream whilst retaining capital for further investment in the business to pursue our pipeline of strategic growth initiatives. 
Growth Initiatives & Capital Management  
Our long-term financial goal is to maximise growth in shareholder value. 
BSA has recently undertaken and completed a comprehensive strategic review.  Our core markets have strong demand and we are well positioned for future organic growth.  BSA is also investigating inorganic merger & acquisition opportunities to enhance our client offering. 
BSA maintains a significant franking credit balance of $13.9m as at 30 June 2019.   The board is currently considering a range of capital management options to release franking credits.   
BSA will communicate the outcome of its capital management review in due course. 

--- Ends ---

Disclosure:  I hold BSA shares.

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#Broker/Analyst Views
Added 7 months ago

04-June-2020:  Phillip Capital: BSA Ltd (BSA): Update and Interim Results Review - Covid impacts but Value remains

PC have an "Accumulate" call on BSA and a 28 cps price target.  BSA closed at 25.5 cps today, up half a cent.  [I hold BSA]

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#FY20 H1 Results
Last edited 11 months ago

25-Feb-2020:  Top shelf results from BSA - having sold their HVAC Build Major Projects division, they have been substantially derisked in terms of cost blow-outs on those major projects, and they have also increased their percentage of recurring revenue from longer-term annuity-style contracts.

Highlights of their FY20 H1 Results:

  • Revenue of $258.9m, up 30.4% on pcp for continuing operational streams.
  • Recurring revenue of 81% has substantially increased with the divestment of HVAC Build Major Projects.
  • EBITDA (reported) of $12.8m, up 39.1% on pcp (H1 19 = $9.2m).
  • Growth in Connect and Fire Build operational streams versus pcp.
  • Profitability decline in Maintain due to investment into regional expansion, technology and capability to set platform for next phase of growth.
  • EBITDA margin of 4.9%; up 0.3 percentage points on pcp not withstanding investment in the Maintenance business.
  • Reported NPAT up 17.5% to $4.7m.
  • Earnings per share increase of 14.3% to 1.084 cents from continuing operations – reflective of strong EBITDA performance.
  • Interim dividend of 0.5 cents per share, fully franked. First interim dividend since March 2013.
  • Net cash of $15.2m, up $3.0m on pcp (excl divested JO cash).
  • Cash flow from operations of $8.4m reflecting an OCFBIT/EBITDA* conversion rate of 66%.  No factoring has been applied to the Balance Sheet.

* Operating Cash Flows Before Interest and Tax (OCFBIT) as a percentage of EBITDA (from continuing operations).

Investor Presentation for 1H20

Half Yearly Report and Accounts

I hold BSA shares.  I think they have a lot of similarities to Service Stream (SSM) not least of which is that they service the same industries - predominantly telcos, the nbn, Foxtel, etc.  BSA are turning around their ship.  Being smaller, it doesn't take so long.  They look pretty good here to me.  The hard work's done.  They've settled outstanding claims around their messy prior year problematic HVAC Build Major Projects division contracts - such as the new Royal Adelaide Hospital - and have now sold that division, so history won't repeat there.  They've significantly increased their percentage of revenue that is now recurring from longer-term annuity-style contracts (now circa 81%).  They look good.  In any other environment this result would have been greeted with more enthusiasm by the market, but in the current environment it's pretty hard to impress it seems.  They will get positively re-rated when things get back to normal, and their next result should be even better. 


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