Company Update: Civmec Limited (CVL SP), 8 September 2021 Stro | KGI Securities Singapore

Company Update: Civmec Limited (CVL SP), 8 September 2021
Strong fundamentals spearheading growth

Earnings beat. Civmec’s FY2021 net profit (YE 30 June 2021) surged 97% YoY to A$34.6mn, beating our estimates of A$33.5mn.

China’s iron ore appetite. Even though iron ore prices have been on a downtrend recently as Chinese policymakers attempt to cut steel production, China’s iron ore imports hit new highs in August, suggesting the country’s continued reliance on the commodity.

Mid and long-term drivers. Likelihood of increased contract wins as the Australian government ramps up on defence and infrastructure spending. Overall revenue supported by approximately 20% recurring income from maintenance and upgrading works. Buoyant commodity market to drive capex spending for miners.

We maintain an OUTPERFORM recommendation and revise our TP to S$0.90, based on an unchanged 12.0x FY2022F P/E.


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