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#Results H1 FY2021
Added 4 days ago

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.]

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#ASX Announcements
Added 2 weeks ago

SRG Global Awarded $150m Term Contract to Provide Multi-Disciplinary Services to Fortescue Metals

 • SRG Global awarded a $150m, five-year term contract

• Master Agreement for Maintenance and Shutdown Services

• Servicing Fortescue’s mine, rail and port locations throughout Western Australia SRG Global Ltd (‘SRG Global’ or ‘the Company’)

(ASX: SRG) is pleased to announce it has been awarded a five-year term contract with Fortescue Metals Group (ASX: FMG).

The $150m term contract is a Master Agreement for Maintenance and Shutdown Services, initially to provide rope access and electrical maintenance requirements across FMG mine, rail and port locations throughout Western Australia.

Locations include Christmas Creek, Cloudbreak, Firetail, Kings Valley and Eliwana mine sites, along with its supporting rail and port infrastructure.

The contract will commence immediately for a period of five years.

SRG Global Managing Director, David Macgeorge, commented: “We are delighted to be selected as a key partner to FMG and to provide critical maintenance and shutdown services across their Pilbara operations for the next five years. This is another significant step forward in our strategy to build a portfolio of annuity earnings, with quality clients, to deliver long-term sustainable growth.”

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#New Contracts and Extensions
Added 3 weeks ago

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.]

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#Guidance Upgrade
Added 3 months ago

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.]

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#New Contracts and Extensions
Added 3 months ago

24-Nov-2020:  $100m Specialist Facades and Structures Contracts Secured

Also - back on 17-Nov-2020 (one week ago):  $55m Specialist Dam, Bridge & Tank Contracts Secured

Today's announcement ($100m is a big contract for a $145m company like SRG):  

SRG Global Secures Specialist Facades and Structures Contracts Valued at ~$100m

Highlights:

  • SRG Global has secured two contracts totalling ~$100m
  • Specialist Facades contract with Multiplex for works at the Queens Wharf Residential Tower in Brisbane, QLD
  • Structures contract with D&C Corporation for the Elizabeth Quay West development in Perth, WA
  • $550m of new contract wins since the start of the FY21 financial year

SRG Global Ltd (ASX: SRG) is pleased to announce it has secured two new contracts totalling ~$100m.

The first contract is with Multiplex to complete Specialist Facades works at the Queens Wharf Residential Tower in Brisbane, QLD. The scope of works includes the design, supply and installation of engineered curtain wall facades. The project is expected to start immediately and conclude around March 2023.

The Queens Wharf Residences, Tower 4, is a 67-level residential tower. It is the first of the three residential towers to be constructed as part of the Queens Wharf precinct. Once fully developed, Queens Wharf Residences will be a mixed-use building which includes a Skydeck on Level 26 and recreational facilities on the lower floors.

The second contract, with D&C Corporation, is to complete Structures works at the Elizabeth Quay West development in the Perth CBD, WA. The project is expected to start immediately and end around June 2022. This will be the fourth major contract SRG Global has been awarded in the Elizabeth Quay Water Front Precinct.

David Macgeorge, Managing Director, commented: “We continue to secure significant contracts, on some of the most important developments across Australia, demonstrating the value of our long-term, trusted relationships with our key clients. These contract awards are also evidence of our strong technical expertise and 40-year track record of delivering specialist building projects.

“With $550 million of new contract wins since July, many of them long-term, SRG Global is in a period of significant momentum that we anticipate extending well into calendar 2021. Importantly, the contract wins are being achieved across a diversity of sectors and geographies, positioning SRG Global well for long-term, sustainable growth.”

--- ends ---   [I hold SRG shares.]

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#New Contracts and Extensions
Added 3 months ago

17-Nov-2020:  $55m Specialist Dam, Bridge & Tank Contracts Secured

Highlights:

  • Specialist balanced cantilever bridge contract variation with Transport for NSW as part of the New England Highway upgrade at Bolivia Hill, NSW
  • Specialist design and construct contract with Water Corporation for a 20ML water tank in Karratha, WA
  • Specialist dam remedial works at Paradise Dam, QLD for Sunwater / CPB Contractors

SRG Global Ltd (ASX: SRG) is pleased to announce that it has been awarded a contract variation with Transport for NSW as part of the previously announced New England Highway upgrade project at Bolivia Hill. The project is expected to complete in August 2021.

SRG Global has also secured an additional contract with Water Corporation to provide specialist design and construction of a 20ML water tank in Karratha, Western Australia. This project will commence immediately and is expected to finish towards the end of 2021. This further strengthens our relationship with Water Corporation being the third tank construction project we have been awarded in the last two months.

A further contract has been awarded to SRG Global by CPB Contractors to provide specialist dam remedial works at Paradise Dam for Sunwater. This continues our longstanding relationship with Sunwater, having recently successfully completed the Fairbairn Dam project. This is a return to Paradise Dam having previously been engaged on this dam in 2016. The project is expected to be completed by the end of the current financial year.

David Macgeorge, Managing Director, commented: “These contract awards highlight our diverse capability using specialist construction methods in our core markets of dams, bridges and tanks. We look forward to continuing our relationship with Transport for NSW, Water Corporation, Sunwater and CPB Contractors and building on our strong track record in these markets.”

[I hold SRG.]

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#AGM FY20
Added 5 months ago

8 Oct 20: SRG held its AGM today.   There was nothing particularly new in the AGM. 

  • They have won $385m of contracts since 1 July 2020.
  • Further imminent / near-term contract wins expected
  • They confirmed the FY21 EBITDA guidance oef $38-$42m. 

I was disappointed though that no other shareholders asked any questions at the AGM.

I asked about their Free Cash Flow which was negative in FY20 and whether they expected it to turn positive in FY21.  Operating cash flow should increase but the new contracts will require capital and they are in a growth stage so they were not prepared to point to it being FCF positive in FY21.

I asked whether their margins were being maintained with the large of new contracts.  Yes, they are maintaining margins at around 11%.

I asked whether the company would consider a on market share buyback.  The chairman's answer was that they are not considering a buyback.

The AGM slidedeck can be downloaded from this link.

https://www.asx.com.au/asxpdf/20201008/pdf/44nh5kwj7wsz4k.pdf

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#ASX Announcements
Added 5 months ago

South 32 contract

SRG Global Secures Long-Term Refractory & Access Contracts with South32, valued at ~$125m
Highlights:
• New eight-year ~$100m contract with South32 for specialist Refractory Services
• Two-year ~$25m extension on existing six-year engineered Access Services contract
• Continuing to deliver on SRG Global strategy of transitioning business mix towards annuity/recurring earnings
SRG Global Ltd (‘SRG Global’ or ‘the Company’) (ASX: SRG) is pleased to announce it has secured a long-term ~$100m contract with South32 Worsley Alumina (‘South32’) to provide specialist Refractory Services, including gunning and casting and installation of refractory products and anchors. Works under the contract will commence in October 2020 with a duration of eight years.
South32 has also extended SRG Global’s existing engineered Access Services contract for a further two years. The contract extension is valued at ~$25m and will see SRG Global continue to provide access services at South32’s Worsley Alumina operations until mid-2027.

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#ASX Announcements
Added 6 months ago

$65m Specialist Facades and Engineering Contracts Secured

 

Highlights:

• Specialist post-tensioning engineering and engineered products contract with John Holland for the Sydney Football Stadium Redevelopment at Moore Park in Sydney

• Specialist Facades and Structures contract for the Capital Square Development in Perth

• Specialist Facades contract with Lendlease for works at 150 Lonsdale Street in Melbourne as part of the Wesley Place precinct SRG Global Ltd (‘SRG Global’ or ‘the Company’) (ASX: SRG) is pleased to announce that it has secured a contract with John Holland to provide specialist post-tensioning engineering and engineered products for the Sydney Football Stadium Redevelopment at Moore Park in Sydney.

SRG Global has also been awarded a contract to complete Specialist Facades and Structures works at the Capital Square development in the Perth CBD. The scope of works includes the design, supply and installation of engineered curtain wall facades and structures work.

SRG Global has also secured a Specialist Facades contract to design, supply and install the specialist engineered curtain wall facades at 150 Lonsdale Street in Melbourne. This contract will be the third project undertaken by the Company for Lendlease, on behalf of Charter Hall in the Wesley Place precinct, having previously completed 130 Lonsdale Street and with 140 Lonsdale Street currently under construction.

View Attachment

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#New Contracts and Extensions
Added 6 months ago

10-Sep-2020:  $65m Specialist Facades and Engineering Contracts Secured

[I hold SRG shares.  When SRG reported on August 25th, they said that there were more new contracts to be announced shortly.  Every time they have said that in the past, they have delivered.  And they have this time as well.  I expect that these three new contracts (detailed in this announcement) are not all of them either.  In July, they had 5 different announcements of new work, and then another one in early August.]

SRG Global Secures Specialist Facades and Engineering Contracts Valued at ~$65m

Highlights:

  • Specialist post-tensioning engineering and engineered products contract with John Holland for the Sydney Football Stadium Redevelopment at Moore Park in Sydney
  • Specialist Facades and Structures contract for the Capital Square Development in Perth
  • Specialist Facades contract with Lendlease for works at 150 Lonsdale Street in Melbourne as part of the Wesley Place precinct

SRG Global Ltd (ASX: SRG) is pleased to announce that it has secured a contract with John Holland to provide specialist post-tensioning engineering and engineered products for the Sydney Football Stadium Redevelopment at Moore Park in Sydney.

SRG Global has also been awarded a contract to complete Specialist Facades and Structures works at the Capital Square development in the Perth CBD. The scope of works includes the design, supply and installation of engineered curtain wall facades and structures work.

SRG Global has also secured a Specialist Facades contract to design, supply and install the specialist engineered curtain wall facades at 150 Lonsdale Street in Melbourne. This contract will be the third project undertaken by the Company for Lendlease, on behalf of Charter Hall in the Wesley Place precinct, having previously completed 130 Lonsdale Street and with 140 Lonsdale Street currently under construction.

David Macgeorge, Managing Director, commented: “We are pleased to be involved with these significant landmark developments at Sydney Football Stadium at Moore Park in Sydney, Capital Square Development in Perth and the Wesley Place precinct in Melbourne. These contract awards are evidence of our engineering-led specialist capability with repeat tier one clients”

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#Business Update
Last edited 8 months ago

02-July-2020:  Market Update & Interim Dividend Payment Brought Forward

This was some positive news from SRG Global at long last.  In fact, I remember that the last time David Macgeorge said that some new contract awards were imminent, he was correct, and we got a steady flow of new contract award announcements over the next few weeks.  That was too long ago however.  The market had all but written SRG off before this morning.  They closed at 19c yesterday, -68% below their 60c year-high almost 12 months ago.  While they're up around +30% today on this update, it's clearly off a low base and they've got a lot more work to do.  However, it's a start, and it will hopefully be a positive turning point.

Market Update & 1H Dividend payment brought forward

SRG Global Ltd (ASX: SRG) provides the following market update, including the impact of COVID-19 during which the Company implemented a number of actions to ensure the safety and wellbeing of its people, continued delivery of services to customers and cost mitigation initiatives to ensure the Company remains in a robust financial position. These actions have resulted in a more simplified business with a reduced fixed cost base and a focus on core business, core clients and core geographies.

Pleasingly, the Company has withstood the short-term challenging market conditions and is now well positioned for long-term sustainable growth, with high levels of annuity earnings, strong exposure to growth industry sectors and the fast tracking of Government stimulus in Infrastructure Construction.

Highlights

  • FY20 Underlying EBITDA1 expected to be $20m - $21m
  • FY21 EBITDA growth expected to be ~50% from FY20 Underlying EBITDA(*1) 
  • Significant liquidity with available funds of $73m, with net debt reduced in 2H to $8m
  • 1H Interim Dividend payment of 0.5 cents per share brought forward to 30 July 2020

COVID-19 Impact

  • FY20 EBITDA(*1) results impacted by a number of key drivers related to COVID-19, including:
    • New Zealand Government imposed complete shutdown of operations for a six week period
    • Deferral of non-essential maintenance and major shutdown work in Australia and NZ
    • Productivity and commercial issues in the Building divisions as a result of COVID-19 driven compliance measures and industry pressures
    • Disruption on international projects due to reduced access to sites and labour
  • Credit loss positions are anticipated due to the economic challenges caused by COVID-19 and as a result a provision of ~$5m within the Building divisions is expected to be recognised
  • Restructuring costs incurred in 2H FY20 of $2.5m, taking the total annual cost for FY20 to $4m

Business Outlook

  • Work in Hand (‘WIH’) of $707m and an opportunity pipeline of $6.2b
  • Imminent / near-term contract wins in Asset Services, Specialist Civil and Specialist Facades
  • Asset Services expected to return to normal levels of activity in Q1 FY21
  • Mining Services operating in high quality growth commodities, ie. gold and iron ore
  • Positive exposure to fast tracked Government stimulus programs in Infrastructure Construction
  • Continued transition of business mix towards recurring revenue with SRG Global’s earnings profile expected to be two thirds annuity / recurring in nature and one third project based

Note 1 (*1): Pre-adoption of AASB 16 and before restructuring costs & COVID-19 related credit loss provisions (all subject to audit)

Strategy

David Macgeorge, Managing Director said, “SRG Global’s focus has and will remain the safety and wellbeing of our people and accordingly we proactively implemented a range of safety, supply chain and cost mitigation measures to manage the company through the uncertainty caused by COVID-19.

“SRG Global’s strategy has been to shift towards a greater proportion of annuity / recurring earnings versus project-based earnings. COVID-19 came at a very challenging time as we were starting to build strategic momentum in the business. The uncertainty caused by COVID-19 made us reflect on what we needed to focus on in the future. We have now simplified the business, changed the way that we operate and reduced the fixed cost base, fast tracked what we were not going to do moving forward and focused on core business, core clients and core geographies.

“With the actions we have now taken, we expect FY21 EBITDA growth to be circa 50% from underlying FY20. We have a strong pipeline of opportunities in excess of $6b, with positive exposure to Government backed Infrastructure investment, high quality commodities, diverse industries and a tier one client base. This has us well positioned for long-term sustainable growth.”

Corporate

SRG Global has implemented a number of cost mitigation initiatives to ensure the Company remains in a robust financial position through the uncertainty of the COVID-19 pandemic. The outcome is a more simplified business moving forward with a reduced fixed cost base. This has resulted in the implementation of significant restructuring initiatives including:

  • Reduced Board positions from seven to four
  • Reduced Executive positions from eight to six
  • Reduced fixed cost base within both the corporate and business unit overhead bases
  • Exited fixed cost base in the US
  • Scaling back of the Building division, specifically Structures Victoria and Building Post Tensioning in both Australia and the Middle East

SRG Global is in a strong liquidity position with available funds of $73m, banking facilities not due for renewal until early FY22 and access to additional equipment finance facilities. The Company continued to invest in growth capital in 2H FY20 including the commencement of five-year contracts with both Alcoa and Saracen Minerals, the latter requiring new drill rig purchases of $6m (funded through equipment finance debt). Despite the above investment, the Company’s net debt position improved in the second half to $8m (inclusive of $26m of equipment finance debt).

On 31 March 2020 the Company announced a deferral of its 1H FY20 interim dividend of 0.5 cents per share to 29 October 2020 which was part of a prudent approach to cash management due to the uncertainty of COVID-19. However, with a positive outlook and a strong liquidity position, the Board has resolved to bring forward the payment of the interim dividend to 30 July 2020.

As part of the annual reporting and audit process SRG Global will undertake a review of its intangible asset base in the Construction Segment. As part of this review and in relation to a scaled back approach to the Building division, a non-cash impairment of goodwill may be recognised.

Segment Update

SRG Global provides the following update on the business activities and conditions across the company’s operating segments.

Asset Services Segment

  • Experienced significant growth in FY20 through multiple contract wins
  • 2H FY20 activity levels impacted by COVID-19 through the deferral of non-essential maintenance and major shut-down work across Australia and New Zealand
  • New Zealand experienced a Government imposed 6-week shut down of operations
  • Asset Services operations expected to return to normal levels of activity in Q1 of FY21
  • Excellent contract mobilisation with Alcoa for five-year multi-disciplinary contract
  • Continue focus on innovation and technology as a market differentiator
  • Imminent / near term contract wins expected in both Australia and New Zealand

Mining Services Segment

  • Continued to perform strongly through the COVID-19 period
  • A number of early and proactive operational measures were implemented to ensure continuity of service delivery across all operations
  • Minimal financial impact in production drill and blast as a result of the above
  • COVID-19 had some financial impact in Geotech through deferral of non-essential work to FY21
  • Excellent start up with new five-year contract with Saracen Minerals
  • Key commodity exposure remains in gold and iron ore sectors
  • Focus is on innovation and selective growth in high quality commodities

Construction Segment – Specialist Building

  • Specialist Facades business largely unaffected due to differentiated business / operating model with a number of imminent / near term contract wins expected
  • COVID-19 significantly impacted productivity in Structures Victoria and Building Post-Tensioning businesses along with a challenging operating environment. Moving forward these businesses will be scaled back and focused on key tier one clients only
  • Structures West now commenced major Multiplex project addressing the known carrying cost issue with a number of good opportunities in the pipeline

Construction Segment – Specialist Civil and Engineering

  • Civil operations in Australia performing strongly and largely unaffected by COVID-19
  • Positive exposure to a pipeline of opportunities being fast tracked through Government stimulus
  • Engineered product sales are continuing to grow with a positive pipeline of opportunities
  • COVID-19 impacted International operations and access to the US, Middle East and South Africa
  • A reduced fixed cost base business model has been implemented including managing future US opportunities from Australia and scaling back operations in the Middle East
  • Will continue to target specialist projects in dams, bridges and tanks globally from Australian base
  • Imminent / near term contract wins expected in Australia 

Work in Hand

The Company has work in hand of $707m as at 30 June 2020 with approximately two thirds of work in hand annuity / recurring in nature. SRG Global has a strong pipeline of opportunities in excess of $6b, with positive exposure to Government backed Infrastructure investment, high quality commodities, diverse industries and a tier one client base.

Outlook

SRG Global is very well positioned for sustainable growth in FY21 and beyond underpinned by a solid work in hand position, a strong opportunity pipeline with a number of imminent and near term contract wins expected and a future earnings profile of two thirds annuity / recurring in nature and one third project based.

SRG Global expects FY21 EBITDA growth to be ~50% from FY20 EBITDA of $20m - $21m.

– ends –

Disclosure:  I hold SRG Global shares.  I've been very patient with them, and I'm hoping that patience is now going to be repaid.  There are a lot of positives in this update, however words are cheap, and it's actual results that matter.  I'm hopeful now (based on available information of course, not just based on hope) that the results that myself and other shareholders have been waiting for are now on the way.  I think SRG is well positioned and well managed and I particularly like their recurring (annuity-style) revenue focus for two thirds of their revenue, allowing them to be very selective with the work they take on in shorter-term construction projects.  In the conference call today, David Macgeorge made it clear that they don't need to take on high-risk or low-margin construction work, and they won't be doing that.  That's what I wanted to hear.  That one-third-of-revenue construction segment work might be lumpy but it WILL be profitable.  That's the story they're telling today, and I'm inclined to believe them.

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#COVID-19 Update
Added 11 months ago
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#Broker / Analyst Reports
Last edited 12 months ago

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.

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#ASX Announcements
Last edited one year ago

31-Jan-2019:  New Contract Win for SRG Global - see here.

SRG Global secures $41.6m transport infrastructure project in JV with WBHO 
 
Highlights:

  • SRG Global has entered into a 50/50 joint venture (‘JV’) with WBHO Infrastructure Pty Ltd to deliver the Wanneroo Road and Ocean Reef Road Interchange project
  • The 18 month, $41.6 million contract was awarded by Main Roads Western Australia

Project scope includes:

  • Specialist engineering and construction of substantial bridge structures over the existing intersection,
  • Construction of off and on ramps,
  • Service relocations,
  • Drainage enhancements, and
  • Upgrades to all related path and pedestrian crossings 

 
SRG Global Ltd (ASX: SRG) is pleased to announce that it has been awarded the large-scale Wanneroo Road and Ocean Reef Road Interchange project. SRG Global will enter into a joint venture on an equal basis with WBHO Infrastructure Pty Ltd (‘WBHO’) to deliver the $41.6 million contract (SRG Global share: $20.8 million). The project is funded by the Commonwealth and State Government as part of a $2.3 billion investment in road and rail infrastructure. This project will alleviate congestion at one of the busiest intersections in Perth’s North Metropolitan area, improving journey times and safety for road users and pedestrians. Specialist engineering and project planning works are expected to commence in early 2019 with a total project duration of approximately 18 months.

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#New Contracts and Extensions
Added one year ago

29-Jan-2020:  $90.0m Multi-disciplinary Asset Services with Alcoa Executed

Highlights:

  • SRG Global has now executed a new $90.0 million multi-disciplinary asset services contract with Alcoa of Australia Limited (‘Alcoa’)
  • The scope of services includes heavy mechanical and electrical maintenance, specialist rope access and scaffold services at Alcoa’s alumina refinery in Kwinana, Western Australia
  • Site mobilisation is well advanced with contract services to commence in February 2020.  

 
SRG Global Limited (SRG) announced in December 2019 that the Company had been awarded preferred tenderer status for a new $90.0 million multi-disciplinary asset services contract with Alcoa.  SRG is pleased to advise that the contract has now been executed.

The services will be provided at Alcoa’s Kwinana Alumina Refinery in Western Australia with a contract duration of five years.  Site mobilisation is well advanced with contract services to commence in February 2020.

SRG Global Managing Director, David Macgeorge said, “We are very pleased to have now executed this contract.  This is a very significant contract award for SRG Global in our Asset Services division and showcases our ability to deliver multi-disciplinary integrated solutions for tier one customers.  We look forward to building a long-term partnership with Alcoa to deliver value-engineered maintenance and access services that drives value for their operations.”

 

Disclosure:  I hold SRG shares.

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