Ann: First Half 2019 Results, page-6

I was doing some further digging on the results and the subdued s/p response today could be due to the performance of the labour hire in Q2. Although the AGM disclosures are not as detailed as the H1, it looks like labour hire EBITDA fell by about $100-200K or 5% quarter on quarter in Q2. Given the large contract loss and the Concept Engineering slowdown in Q2, this is not unexpected. That said, for investors running various screens across the microcap space, they will just see the revenue declines in the group's largest business and earnings declines Q on Q, which may slow the interest in the name. However, this does not diminish the outlook for this company. Based on Q2 run rate, we are looking at annualised EPS of about 4.2c, which at 70% payout is about 2.9c dividend. At a 27c share price, this is a P/E of 6.5x and a grossed up divi yield of 14% (note: these are not FY forecasts, just annualised Q2 results). What is more important to note is that these very attractive valuation metrics don't factor in a return to strong growth for Concept Engineering which the company expects to occur from mid Q3 (i.e from now). Unless you are a disbeliever in the infrastructure growth story in Australia, it is reasonable to expect a return to solid CE growth in the near term. The results also do not factor in any benefit from the work they are doing in the Qld training operations - if they can get this profitable in line with their other training businesses, we could be looking at a $2M EBITDA training business within 12 months.  Mgt continue to deliver on their promises and there is nothing in these results to suggest they will not continue growing earnings, with EBITDA above $10m likely in 2020. This is also the type of stock that could move significantly higher over a short period due to a combination of earnings growth and multiple expansion. If ASH achieves $10m EBITDA in 2020 (which in my view is conservative and is broadly in line with the Q2 run-rate), and the P/E multiple rises to 14x (its key peer PPE trades at 19x), this would equate to a share price of about 56c, or more than double today's price.