Good value at $1?, page-21

Thanks for your comments cxanity.

I have no affiliation with the company whatsoever. I am just an experienced observer of the construction industry trying to offer a balanced view. I think the market has overvalued most companies involved in this industry and Decmil is no exception. I also think is very dangerous to base forecasts and predictions on historical performance as these simply will not be matched by any company for at least the next 2 to 3 years - it could even be 5 years. It is going to be a real struggle for all in the industry.

With respect to their forecast of $450M to $550M, I think they were relying on winning a major contract in order to achieve this. In my opinion this will not be achieved and any projects they may win between now and the end of FY will have limited opportunity to contribute to FY revenue due to the lengthy gestation periods these type of projects typically have. If not achieved, urgent reduction of their $45M overhead will be necessary.

My valuation of the Queensland property is based on the expected downturn of the industry. I would be surprised if it is running at more than 20% occupancy which would surely be at a loss. Don't hold your breath waiting for gas train shut down work to fill rooms as there are about 3000 available on the island itself. Rental vacancies in Gladstone are at 10 year highs, as are hotel vacancies. I simply cant see employers working in Gladstone wanting to put a workforce in a location 20 minutes from Gladstone when there are better and more cost effective options available. The book value of $180M they had in their annual report is just ludicrous. I think this will quickly become a money pit. Agreed - at least they are not burdened with the debt on it.

The construction market is saturated with companies like Decmil, all of them desperate for work. I don't think Decmil offer anything special or unique which would give them a competitive edge. Winning work will not be easy and delivering it for a profit if won will be even harder.