I was intrigued by the sudden ~30% price drop after the company's share price had almost doubled since the last bottom in late 2022/early 2023. So with a rising book order that eventually translated to rising revenue/profit, Mr Market has given Civmec a re-rating (upwards). But with a sudden change in sentiment by Mgt guidance, Mr Market also gives it a re-rating (downwards). I guess when you prosper (and suffer) by the sword.
Civmec 1HFY25 Results Below Consensus - Near-Term Challenging Outlook
More worryingly, Civmec’s order book continued to decline by 20.9% q-o-q to AUD633m as at end-Dec 2024 given delays in the timing of key project awards or re-scheduling of timing of projects.
Whilst Civmec continues to maintain its strong relationship with long-term customers, it has observed a shift in market conditions amid the current geopolitical tensions. These delays / re-scheduling of new projects will result in lower levels of activity for the group in 2HFY25 (with the potential to extend into 1HFY26).
https://sginvestors.io/analysts/research...2025-02-17
----------------------------------------
There is a reason why project based companies generally have lower valuations than those which can earn from "recurring revenue". Of course, if an investor gets the timing right, profits should be much larger and not to mention, more satisfying.
But if one answers the call of the siren of rising profits/book order and gets into the cycle at the wrong time, it will be very damaging too.
1H25 guidance (latest results):
Whilst tendering activities remain strong and forward medium-term indications are positive Civmec has observed a shift in market conditions, driving delays in the timing of key project awards or the re-scheduling of projects. These delays and re-scheduling are expected to result in lower levels of activity for the Group during 2H FY25, with the potential to extend into 1H FY26. Despite these challenges, the Group notes that the pipeline of tendering activities remains strong, and forward indications are positive for upcoming projects across various sectors.
FY24 guidance:
Tendering activity continues to be strong across all sectors, with the Group focused on securing projects that will allow it to grow its workforce and revenue at a sustainable pace. Opportunities remain plentiful for Civmec to keep replenishing its order book, which amounted to over A$853 million as of 30 June 2024.
1H24 guidance:
Tendering activity continues to be strong across all sectors, with the Group focused on securing projects that will allow it to grow its workforce at a sustainable pace while also meeting our objectives to increase the proportion of the Group’s revenue in maintenance and infrastructure works. The Group maintained its order book above A$1 billion, which demonstrates our ability to secure and perform multiple maintenance and capital upgrade contracts in conjunction with delivering on some of the most significant resources construction packages in Australia.
FY23 guidance:
Tendering activity continues to be strong across all sectors, with the Group focused on securing projects that will allow it to grow its workforce at a sustainable pace. Opportunities remain plentiful for Civmec to keep replenishing its order book, which amounted to $1.149 billion as at 30 June 2023, an increase of 10.6% from FY22.
Homepage
PR Newswire
