ASH Peer Analysis

I have been comparing ASH and PPE given the significant valuation differential between the two (see summary below - based on 2018 results). Clearly PPE is generating stronger margins, however ASH margins are continuing to strengthen as it scales up and its business mix shifts towards the high growth Concept Engineering business. In addition, the training business provides a potentially significant additional earnings/repricing catalyst over the next few years. While there is inherent cyclicality in labour hire, and we are in a sweet spot at the moment, the near term outlook remains strong and the infrastructure boom should provide multi year tailwinds for CE/ASH. Either way, at 25.5c, this looks cheap despite the strong run in the last 12 months.