<Results First Take> Civmec delivers record results for FY22, dividend surprise
- FY22 net profit of A$50.8m (up 46% y-o-y) beats estimates on the back of record revenues of A$809.3m (up 20% y-o-y)
- Entering FY23 with robust orderbook of A$1bn, which translates into 3% growth yoy
- Dividend surprise of 3.0 AUD cents (FY21: 2.0 AUD cents)
- Civmec is trading below book value, with FY22 NAV per share at AUD 74 cents (SGD 71 cents) (FY21: AUD 58 cents); we currently have a BUY recommendation and TP of S$0.88 (TP under review)
(+) FY22 revenue and net profit at record highs
- FY22 revenue reached A$809.3m, up 20% yoy, in line with our estimates.
- FY22 net profit at A$50.8m, up 46% yoy. FY22 net profit beat our estimates by 9%.
- Rising input costs well managed throughout the year, with FY22 gross margins at stable levels at 11.2% (FY21: 11.1%). Possible signs that raw material costs have reached its peak.
- Net profit margins at 6.3%, above our estimate and management’s guidance of 6.0%, due to effective cost controls on administrative expenses.
- Dividend surprise of AUD 3 cents, in lieu of the strong results, which translates into a dividend yield of 4.5%. Dividend declared is above our expectations of AUD 2 cents (FY21: AUD 2 cents), and above what management guided of AUD 2 cents. This translates into a dividend payout ratio of 30% (FY21: 29%).
(+) Robust orderbook of A$1bn, underpins steady income for FY23, with some highlighted projects as follows:
- Commencement of Kwinana lithium refinery project for Covalent. This represents the fourth lithium plant that Civmec has been involved in.
- A one-year term contract with Rio Tinto for supply of full-time labour to perform Mechanical, Refractory and Electrical services at the Boyne Island smelter (BSL) in Gladstone QLD to assist with the Reduction Line Cell recovery.
- A contract with Rio Tinto for their Yarwun K1 Major Outage Services 2022. This contract involves the supply of all supervision, mechanical, scaffolding and refractory working requirements and associated equipment for performing inspection, maintenance and improvement works on the K1 Calciner unit during its regularly planned half yearly shutdowns in 2022
- Increased activity within the energy sector, with recent award of two contracts with Baker Hughes:
- For the supply of subsea structures and module for the Beach Energy Otway phase 5 project in Victoria. The contract includes the supply of a 4-slot production manifold with integrated foundation, supply of a 2-slot flowline end manifold (FLEM) with integrated foundation and supply of a 1-slot flowline end termination (FLET) with integrated foundation.
- For the supply of subsea control manifold structures (SCMS) for Chevron’s Janz-Io field development approximately 130 km NW of Barrow Island.
(+) Further expansion plans as a positive signal
- Civmec to acquire a 28,510 square meter land holding in Gladstone, Queensland, to establish a permanent facility. This facility will replace the leased facility Civmec currently occupy and allow the Group to expand its service offerings in the region. The facility will be developed over the next 18 months.
- More information on capex guidance to come.
(+) Healthy balance sheets
- FY22 debt to equity ratio of 0.09x (FY21: 0.04x)
More updates to follow after analyst briefing.