Ann: Press release FY21 results, page-3

"Very strong second half. Justifies recent price strength. Further capacity increases planned to cope with the pipeline. All good."


All good indeed.

The result, and more significantly, the accompanying commentary, justify not just the recent price strength but also that price strength continuing.

Key takeaways for me were the references to:

- "unprecedented levels of large project work",
- "record work on hand" currently,
- "buoyant general market",
- "investment will continue to be focussed (sic) on improvements to factory capacity and capability", and
- price increases in April and August to recover increased raw material costs


That all reads to me very much like a very tight market which portends the golden trifecta of increased volumes, prices and margins, as well.

So while the JH2021 result (represented by the dark grey bar) was a cracker, I am confident that the next two half year's (represented by he blue bars) will be even better:


[Note: Excludes NRI's, such as Jobkeeper support receipts]


Even at that modest NPAT improvement (which I sense will prove to be conservative) reflected in the chart over the coming halves, it means FY2022 NPAT of $7m, equivalent to EPS of 62c.

That places the stock on a P/E of just 9.3x.

And remember that the company is sitting on $6.7m in net cash at the end of FY2021, which will surely grow to closer to $8m (~70cps) by the end of FY2022.

Therefore, on a net cash-adjusted basis, the prospective P/E multiple is more like 8.2x

So while the stock price has appreciated strongly going into this result, I still think there is meaningful further capital upside.
(Oh, plus a >7% fully franked dividend yield along the way.)

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