CGH 0.00% 11.5¢ calibre group limited

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    Article in AFR________________________________________


    Calibre is oversold and overlooked
    • Publication: Australian Financial Review, Thurs 11 October
    • Journalist: Trevor Hoey

    • Calibre Group only listed on the ASX in August, but the company has been quick to get into stride.
    But even though it delivered a result that was ahead of prospectus forecasts for 2011-12 – and has subsequently made what could be considered astute and strategically sound acquisitions – the company’s share price is still trading at a substantial discount to its initial public offering price of $1.63.

    While the acquisition of G&S Engineering in October resulted in the company’s share price increasing from 99¢ on the day before the announcement of the transaction to a close of $1.15, this is still well shy of the IPO price and substantially below broker projections.

    Following the G&S purchase, UBS increased earnings per share forecasts for 2012-13, 2013-14 and 2014-15. It also increased its 12-month price target from $1.95 to $2.05 and maintained its “buy” recommendation.

    It could be argued that 12 months ago, when there was a completely different take on mining services companies, Calibre would be trading more strongly than it has to date.
    As UBS pointed out when assessing the G&S acquisition, the company was trading on an enterprise value to earnings before interest, tax, depreciation and ammortisation multiple of 3.5, substantially lower than most of its peers.

    Even after its re-rating to $1.15, the implied price-earnings multiple of 5.5 relative to broker forecast for 2012-13 indicates the company is trading at a significant discount.

    Calibre even shapes up well as a yield proposition.
    Analysts at UBS are predicting a dividend of 11¢ in 2012-13, representing a return of nearly 10 per cent relative to a share price of $1.15.

    From an operational perspective, the company shouldn’t be compared with mining contractors with lumpy earnings that can be substantially affected by the delay and/or cancellation of projects.

    A substantial proportion of Calibre’s revenues are generated from maintenance and asset management services, and this area of its business has been further strengthened by the acquisition of G&S

 
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