19-Feb-2021:  The email from the ASX today with all of the free broker reports contained two links to notes from Euroz Hartleys about Civmec (CVL) - here they are:

• 11-Feb-2021:  Euroz Hartleys: Quick Comment:  Civmec (CVL): Half year 2021
• 12-Feb-2021:  Euroz Hartleys: Civmec (CVL): Half year 2021 results

Analyst: Gavin Allen, Senior Analyst, +61 8 9488 1413

12-Feb-2021 PT: $0.85/sh (up from $0.63/sh), Recommendation: Buy   (19-Feb-2021 CVL SP: $0.565).

13-Oct-2020:  Euroz Hartleys:  Quick Comment: Civmec Ltd (CVL $0.46), Buy, Civmec Secures $175m in New Contracts

Analyst: Gavin Allen, 13th October 2020, Buy, Price Target: $0.60/sh

Civmec Secures $175m in New Contracts

Key Points

CVL has been awarded $175m in new contracts across the Metals and Minerals and Oil and Gas divisions of the company

Contracts are as follows:

• BHP Mitsubishi Alliance: Contract to fabricate, modularise and commission 1,800T ship loader at the Hay Point Loading Port in Central Queensland. Work will commence immediately with completion in the second half of CY’22.
  • Contract comes ahead of large infrastructure replacement project at Hay Point Coal Terminal that is still subject to final board approval of BHP and Mitsubishi.
  • Fabrication will be completed in CVL’s newly built Assembly Hall in Henderson.
• Woodside Energy Ltd: Support onshore and offshore production facilities in Australia. Contract is 5 year term plus two one year extension options.
• FMG Iron Bridge and Formosa Steel IB JV: Supply of 4,700T of conveyor, trusses and trestles for the Iron Bridge Magnetite project. Work will commence in October 2020 with the majority of work to be completed in FY’21.
  • Scope of work will be completed at the Henderson Facilities.
• CVL has also secured new increased scope of work packages across the Minerals and Metals and Oil and Gas Sectors.
• In August CVL’s orderbook stood at ~$900m; with CVL noting that work load is already greater than the $391m in revenue generated for FY’20.

Investment Thesis

CVL has traded under investment radars on very light trading volumes. The business put some significant runs on the board in FY’20 and continues to gain in relevance. CVL continues to consistently win new work with tier 1 providers while delivering on existing projects. The recent contract wins support our outlook for FY’21 and provide valuable work for the new Henderson facilities. We look for CVL to continue to convert current and past earnings to cash through FY’21.

Civmec Limited (CVL):

• Share Price: 0.46 A$/sh
• Price Target: 0.60 A$/sh
• Valuation: 0.78 A$/sh
• Shares on issue: 501 m(dil)
• Market Capitalisation: 230.5 A$m
• Enterprise Value: 319.7 A$/m
• Debt: 116.9 A$/m
• Cash: 27.7 A$/m

[CVL shares are not held by Bear77]

Note:  This month (October 2020), Euroz Limited completed the merger with Hartleys Limited which has been renamed Euroz Hartleys Limited. 

Further details:  https://www.euroz.com/groups/euroz-hartleys-limited/

28-Aug-2020:  Euroz: Civmec Ltd (CVL $0.42): Buy, upgrade from Speculative Buy: Full year 2020 Results

Analyst: Gavin Allen, 28th August 2020, Price Target: $0.60/sh (up from $0.51/sh), Recommendation: Buy (upgraded from Speculative Buy).

Full year 2020 Results

Investment case

CVL has reported a solid set of FY 2020 numbers, with EBITDA up 60% to $38.5m at better margin on lower revenues. Operating cashflows were very strong at $95.2m and net debt was better than we had expected. The orderbook is at $900m with work locked away that entirely supports the $391m of revenues generated in 2020. We are looking for revenues around the $535m mark for 2021.

CVL trades under investment radars in our opinion on very light trading volume. It has however put some significant runs on the board in fiscal 2020 and must start to gain relevance. Under the hood it is consistently winning and now demonstrably delivering on tier one projects. In our view there has been investment question around ability to execute. CVL is starting to answer those questions with improving 2020 margin however far more importantly, by converting current and past earnings to cash.

Key points

CVL has released full year 2020 results as follows:

• Revenue of $391m (Euroz $391m), down 20% on pcp
• EBITDA of $38.3m (Euroz $39.2m), up 60% on pcp
• NPAT $17.5m (Euroz $16.5m), up 150% on pcp
• Full year dividend of 1c per share.
• Post recent bank valuation on facilities, NTA has increased to $0.525 per share, up 50%.
• Borrowings (excluding AASB 16 leases) were reduced from $98m to $62.4m and cash at bank is $27.7m or net debt $34.7m; this is a better balance sheet position than we had anticipated, particularly in light of what has been an extensive facilities expansion campaign in advance of ramping defence works.
• The better than expected balance sheet position was driven by a very strong $95.2m in cash generated from operating activities, driven by a significant return of working capital during the period.
• While working capital requirements will fluctuate, and we might expect some level of drain next year as works ramp up, the situation heading into 2021 is robust.
• On that front the orderbook is at $900m, with $260m in new wins during the June quarter.
• On outlook, CVL note secured work load for 2021 is already greater than the $391m in revenue generated in 2020.

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