Maybank Securities analyst Eric Ong has kept “buy” on Civmec P9D with a target price of $1.05 following the company’s FY2024 ended June results.
For its 2HFY2024, Civmec posted a patmi of A$32.5 million, up 10.6% y-o-y, bringing full year earnings to A$64.4 million, up 11.7% y-o-y.
Civmec declared a final dividend per share (DPS) of 3.5 Australian cents, taking the total DPS to 6 Australian cents. Given its net cash balance sheet, Ong believes there is still room for the company to raise its payout ratio.
Turnover for 2HFY2024 rose 31.3% y-o-y to A$541.1 million, mainly due to increased activity levels especially in its resource and infrastructure and defence segments, which more than offset the weaker energy segment, which was down 58% y-o-y.
While Ong notes that Civmec’s order book declined by 17.9% y-o-y to A$853.4 million as at end-June, the company is currently working towards formalising the MoU for a strategic joint venture to tender on the LAND8710 landing craft heavy shipbuilding programme for the Australian government. This could potentially open the opportunity for Civmec to participate in over A$25 billion of future works.
Meanwhile, Civmec’s new facility in Port Hedlands is now fully operational. The company has commenced on delivering maintenance work for local clients, Ong points out.
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The company has also purchased an established adjoining workshop next to its existing land in Gladstone, Central Queensland. This acquisition has expedited Civmec’s objective to establish a permanent base of operations in the region, Ong notes. The company has since moved into the newly acquired facility, thus enabling it to further enhance its service offering and capabilities.
On Aug 1, the move to redomicile Civmec’s parent company to Australia was passed and has been sanctioned by the court on Aug 28. Civmec will lodge the court order on September 4 with the Accounting and Corporate Regulatory Authority of Singapore and the scheme will take effect on the date of lodgement.
The NewCo shares will then commence trading on both the Singapore Exchange S68 and Australian Securities Exchange on September 5.
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This strategic initiative is designed to better align Civmec with local manufacturing requirements in Australia, thereby improving the number of opportunities available to the group, Ong highlights.
As at 4.02pm, shares in Civmec are trading flat at 94 cents.
