A nice set of results for SRG today. The ability to pass on costs is evident in how well margins have held up over the last couple of years. The overarching story here is the transition to being primarily an asset maintenance business with some construction exposure. The AM business continues to grow nicely (segment result below). The EBITDA contribution of the Asset Care business was $5m in the FY segment contribution but, assuming no growth, will contribute $15m in FY24.

Decent revenue tailwind across the business, and a business that is reducing the earnings risk from mispricing construction projects has the potential to bring rising earnings and a rising multiple.

SRG won another nice contract today, $65m for the worlds tallest hybrid timber building in Sydney in a JV with Dexus property group.. SRG Global's facades will integrate solar panels allowing the office building to operate on 100% renewable energy with zero emissions.

SRG are building really good relationships with Dexus and Built and winning some solid contracts. The above contract if successful really is a fantastic outcome for SRG moving forward as you would expect most buildings to be developed in this manner eg zero emissions and could be positive for future JVs.

SRG have had a really positive FY22 announcing

• Revenue 644.2 up 13% (FY21 $570m)
• ebidta of $57.2m up 22% and EBIT(A) of 34.2m up 36%
• strong FY22 operating cashflow with EBITDA to cash conversion of 106%
• 2H fully franked dividend of 1.5cps up 50%. FY22 dividend of 3cps up 50%
• net cash of 20.5m

SRG have given guidance of EBITDA circa 25% higher than FY22

I came across SRG when driving past a construction site and seeing their logo on a site toilet. Always keep you eyes open

24-Aug-2021:  SRG Global (SRG) reported their full year results this morning, and they have delivered increased profit, cash and doubled their dividend, and they are forecasting strong growth in FY22 .

Highlights

• Revenue Up 4% to $570m (from FY20)
• EBITDA Up 61% to $47.1m 
• EBIT(A) Up 151% to $25.1m 
• Strong operating cashflow (FY21 Net Cash of $12.2M from FY20 Net Debt of $8.4m)
• Well-funded for Growth - available funds of $88.2m + undrawn $27.7m equipment finance facility
• Final Fully Franked Dividend Doubled to 1 cent per share (total FY21 dividend of 2 cps)
• Record $1b Work in Hand, Up 41% (from 30 June 2020)
• Strong opportunity pipeline of $6b in diverse sectors and geographies
• Two Thirds Annuity Earnings Profile in FY21 and beyond (recurring revenue)
• Long term Strategy on track and well positioned for long term sustainable growth
• FY22 EBITDA expected to be ~15% higher than FY21 EBITDA result

"The FY21 results demonstrate the continued execution of the SRG Global strategy. The significant level of new contract wins and the record work in hand of $1b is underpinned by demand for the Company’s engineering led, end-to-end solutions, across the asset services, mining and construction sectors."

"The Company is well positioned for long term sustainable growth with two thirds annuity-style earnings and positive exposure to a diverse range of sectors and geographies across the asset services, industrial and mining sectors and government stimulus programs in the infrastructure and construction sectors."

"SRG Global has significantly strengthened its financial position over the past twelve months, moving from net debt of $8.4m to a net cash position of $12.2m. It has also improved its liquidity to $88.2m of available funds, plus an additional undrawn $27.7m of equipment finance facility, with the Company well-placed to fund future growth."

I hold SRG Global (SRG) shares.  They have been through a period since the merger with GCS (Global Construction Services) where they have certainly underwhelmed the market and have not lived up to their own or the market's expectations.  However, I feel they are starting to live up to that potential now, starting with this positive FY21 result, and strong guidance for FY22 (FY22 EBITDA expected to be around 15% higher than FY21 EBITDA).  They certainly have some tailwinds now, and the headwind of a tight labour market and skills shortages - particularly in WA - has not bothered them very much at all in FY21, which is a good sign for the future as well.

23-Feb-2021:  1H FY21 Half Year Results Announcement   plus   1H FY21 Half Year Results Presentation   and   Appendix 4D & 1H FY21 Half Year Report

SRG Global delivers increased profit, cash and dividend, upgrades full year guidance

SRG Global Limited (ASX: SRG), an engineering-led global specialist asset services, mining services and construction group, has delivered its Half Year Financial Results for the six months ended 31 December 2020 (‘1H FY21’).

Highlights

• Revenue Up 6% to $283m (from 1H FY20)
• EBITDA Up 32% to $20.5m (from 1H FY20)
• Net Cash Improved to $5.3m (from Net Debt of $8.4m as at 30 June 2020)
• Fully Franked Dividend Doubled to 1 cent per share in 1H FY21 (from 1H FY20)
• $750m of Contract Wins announced since 1 July 2020 with repeat / targeted clients
• Record $1b Work in Hand, Up 41% as at 31 December 2020 (from 30 June 2020)
• Well funded for growth - available funds of $82m plus undrawn $26.5m equipment finance facility
• Two Thirds Annuity Earnings Profile in FY21 and beyond
• Upgraded FY21 EBITDA Guidance to $45m - $47m (up from $42m - $45m)

The 1H FY21 results demonstrate the continued execution of SRG Global’s stated strategy for growth. The significant level of new contract wins and the record work in hand of $1b is underpinned by demand for the Company’s engineering led, end-to-end solutions, across the asset services, mining and construction sectors.

The Company is well positioned for long-term sustainable growth, with two thirds annuity-style earnings, exposure to the broader macro-economic growth drivers across the mining and asset services sectors, and COVID-19 Government stimulus programs in the Infrastructure and Construction sectors.

SRG Global has significantly strengthened its financial position over the past six months, moving from net debt of $8.4m to a net cash position of $5.3m. The Company has improved its liquidity to $82m of available funds, plus an additional undrawn $26.5m of equipment finance facility, with SRG Global well-placed to fund future growth.

SRG Global Managing Director, David Macgeorge, said: “SRG Global’s strategy of shifting towards a greater proportion of annuity / recurring earnings, with a disciplined focus on core business, core clients and core geographies, is delivering. The Company is in a strong position to continue the momentum in the second half of FY21 and deliver further growth in FY22 and beyond.

“We have upgraded our full year EBITDA guidance range to $45m - $47m, which is a significant increase on the previous year.

“The improved financial performance and guidance is underpinned by our recent contract wins, record work in hand position of $1b and a high level of annuity earnings. The outlook for SRG Global remains positive given the Company’s exposure to diverse sectors and geographies, quality commodities, a tier one client base and growing levels of infrastructure, construction and maintenance expenditure.

“The strength of result means SRG Global will pay shareholders a fully franked dividend of 1c per share, which is double the first half dividend paid in the previous corresponding period.”

--- End of excerpt - click on the links at the top for more ---

[I hold SRG shares, and they are also on my Strawman.com scorecard.]

04-Feb-2021:  SRG Global secures two Term Contracts valued at $45m

Highlights:

• SRG Global has secured a five-year term contract with GFG Liberty OneSteel to provide engineered access solutions at its Steelworks operations in Whyalla, South Australia
• SRG Global has also secured an initial 12-month term contract with Pit N Portal to provide specialist production drill and blast services and explosives supply at the Great Western gold mine in Western Australia

SRG Global Ltd (ASX: SRG) is pleased to announce it has been awarded a new term contract with GFG Liberty OneSteel.  The term contract is expected to commence immediately for a period of five years comprising an initial three-year term, with options for a further two years.  The scope of works includes the provision of engineered access solutions at the Liberty Steelworks site in Whyalla, South Australia.

SRG Global has also been awarded a term contract with Pit N Portal Mining Services Pty Ltd (Pit N Portal).  The term contract is expected to start immediately for an initial 12-month term.  The contract scope includes the provision of specialist production drill and blast services and explosives supply at RED 5 Limited’s Great Western gold mine in Western Australia.

David Macgeorge, Managing Director commented “We are very pleased to have secured these two term contracts, adding to our recurring annuity earnings.  Importantly, the GFG Liberty OneSteel contract is with a repeat customer, providing new services in addition to our existing refractory services term contract.  The Pit N Portal contract was specifically targeted as it builds upon our Mining Services portfolio of high quality growth commodities whilst diversifying SRG Global’s customer base.”

--- ends ---

[I hold SRG shares.]

01-Dec-2020:  Market Update and Revised Guidance Announcement   plus   Market Update and Revised Guidance Presentation   and   Market Update and Revised Guidance Investor Briefing (Today, Tuesday, 1 December 2020, 08.30am WST / 11.30am AEDT)

Highlights

• FY21 EBITDA guidance revised to $42m - $45m (previously $38m - $42m)
• 1H FY21 EBITDA anticipated to be in the range of $19m - $20m
• $550m of contract wins announced since 1 July 2020 with repeat / targeted clients
• Record Work in Hand of $1b, as at 30 November 2020, up 41.5% since 30 June
• Further near-term contract wins expected with repeat / targeted clients
• Earnings profile expected to be two thirds annuity / recurring in FY21 and beyond

--- click on the links above for the full announcements and presentation ---

[I hold SRG shares.  They have halved since I started buying them, back before the merger (of SRG & GCS), but they're heading in the right direction again now.]

21-7-2020:  $25m 5-Year Access and Maintenance Services Contract Secured

David Macgeorge, Managing Director of SRG Global, commented: “This is a significant contract award for SRG Global. We are pleased to be commencing our partnership with Yara Pilbara and look forward to driving value for their business. Importantly, this is another term contract that SRG Global has secured that adds to our growing portfolio of annuity / recurring term contracts.”

[I hold SRG shares]

31-Mar-2020:  COVID-19, Guidance and Dividend Update

09-Mar-2019:  Post 1HFY19 Results, the 4 broking houses / analysts that cover SRG Global have updated their advice to clients and produced updates that include new price targets. 

All 4 reports can be reached from here:  http://srgglobal.com.au/investors/broker-reports/

SRG closed at 36c/share yesterday (Friday 08-Mar-19).

Euroz have maintained their "Buy" call and their new price target (PT) is 49c (downgraded from 87c).

Euroz update

"On balance, despite 1h 2019 disappointment, with $16.8m net cash, the stock is worth more than $0.37 fundamentally. That said, it may trade sideways for a period pending outlook clarity."

Next, Hartleys have retained their "Speculative Buy" call, with a valuation of 47c and a 12-month PT of 48c.  Their valuations have barely changed.

Hartleys Report

"At the current share price, SRG appears good value.  It is going to take some near term good contract wins for a re-rating, or else it will probably take time for market to have earnings confidence.  The management team have a long track record turning around businesses, and are motivated and capable to dramatically improve SRG.  We retain our Speculative Buy though.  We need some near term evidence and comfort that earnings risk is well behind us."

Next, Baillieu Research (formerly Baillieu Holst) have retained their "Buy" call and changed their PT to 50c (from 68c).

Baillieu Research Report

"We believe the digestion of the GCS/SRG merger has been the key driver of divisional underperformance in 1H19, and this has now been washed through our forecasts.  As a specialist services provider, SRG’s pipeline remains (along both the east and west coasts of Australia). Looking through the aberrations of FY19, we believe SRG’s valuation remains attractive, trading on a FY20f EV/EBITDA of 3.6x."

Finally, Argonaut maintain their "Buy" rating with a new 60c valuation (down from 70c).

Argonaut Report

"...we expect the benefits of the SRG-GCS tie-up, and FY19’s deferred revenue, to become more apparent in FY20, where we have EBIT climbing to $34.0m.  Next year’s metrics look appealing and on this basis we maintain a BUY call, although acknowledge sentiment will weigh in the near term."

Disclosure:  I hold SRG shares.

It's going to take time - the market doesn't like SRG right now, but they will get positively re-rated in future years - There's value there, and limited downside from here.  IMHO.