FY22: Results Above Expectations; Positive Outlook For Future Growth
Civmec’s FY22 net profit of A$51m (+47% yoy) beat our expectations by 13% due to robust revenue growth across most sectors and net margin expansion. Dividend also exceeded our expectations by 20%, with a full-year DPS of 3.0 A cents (+50% yoy), representing a dividend yield of 4.7%. Civmec remains positive on its future outlook given the strong tendering opportunities across all the sectors in which it operates. Maintain BUY with a 9% higher target price of S$1.18.
RESULTS
• Results above expectations from revenue growth across most sectors and margins expansion. Civmec’s FY22 net profit of A$51m (+47% yoy) was above our expectations by 13%. Revenue grew 20% yoy, with the infrastructure & defence segment growing 95% yoy and the resources segment growing 13% yoy. On the other hand, the energy segment, which forms around 4% of total revenue, fell 21% yoy. EBITDA margin expanded by 0.8ppt while net margin grew 1.2ppt, mainly due to better operating leverage and more favourable contract terms as most of Civmec’s customers in the resources industry are making good profit.
• Strong tender activity indicates more contract wins. Tendering activity remains strong across all the sectors that Civmec operates in and it is focused on securing projects that will grow its workforce at a sustainable rate. Civmec remains positive about the pipeline and the opportunities to continually replenish its orderbook. Civmec is also increasingly focused on growing the proportion of revenue earned on long-term contracts.
• Progressing well on construction work of lithium plants in the green energy segment. Following the successful completion of the contract with Albemarle for construction work at their Kemerton lithium plant, work has now commenced on Civmec’s contract to construct the Kwinana lithium refinery for Covalent. This represents the fourth lithium plant that Civmec has been involved in.
• Two new facilities under development to support growth. The previously announced facility in Port Hedland has achieved a significant milestone, with the recent settlement of the land purchase and gaining of development approval. The facility will be developed over the next 12 months. In addition, Civmec has acquired a 28,510 sqm piece of land in the region to establish a permanent facility. This facility will replace the leased facility Civmec currently occupies and allow it to expand its service offerings in the region.
