Civmec

Civmec: 1QFYJun13 results showed strong growth. Revenue was $139.3m, +219% yoy, due to higher activity levels in both the Oil & Gas and Mining and Other segments. Gross margins halved to 13.2% from 26.6% yoy, as the nature of contracts undertaken in FY13 have higher avg values and longer terms but come with lower gross margins. As a result, net profit was $8.7m, +68% yoy. On the balance sheet, we note that trade receivables ballooned 62% qoq to $140.5m, while trade payables grew 33% qoq to $77.4m, to support the revenue growth. Order book stands at $144m. On outlook, mgt notes the outlook for the Oil & Gas sector in Australia remains strong and sees no evidence of reversal in current project commitments. But notes the slowdown in the Mining and Resource sector may affect the group in the next quarter and the next 12 mths. Nevertheless, mgt feels the slowdown may bring some new opportunities as packages for fabrication, modular assembly and site works in Australia are likely to be smaller and there will be more opportunities for turnkey projects. Mgt expects to remain profitable for FY13. At $1.14, the stock trades at 16.4x annualized 1QFY13 P/E, 5.9x P/B.