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06/06/23

15:30

Post #: 68156595
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Originally posted by saintex: ↑

Hi,

Just discovered this engineering company, specialised in the asset maintenance business.
It looks to me interesting as it ticks all the boxes :
- growth (apparently mainly organic + some acquisitions)
- good level of margin,
- high level of cash flow/free cash flow (surprising that cash flow from operation has been above EBITDA for the last 18 months, for reasons not yet obvious to me),
- good financial situation with net cash situation,
- valuation looks OK (even quite cheap) based on expected results for FY 23.

Also interesting to note that they do 50 % of their business with defence and 17 % with buildings/facades (interesting because of cladding needs).
The rest is coming from mining and industrials (24 %) and others.

The company has been listed recently (Nov 20).
In the first phase (until Sept/Oct 22), the share price did poorly.
Apparently because their business was not growing much, due to covid according to the company.
Since Sept/Oct 22, the company had a rally, due to a sharp rebound of their business and margin.
In Oct 22, they also announced an acquisition (Wilson's), oil and gas related sector, at a cheap price (less than 4 x EBITDA) which has been delivering since then.

Not sure to understand yet why they have such a high and regular growth since inception (2010) if we exclude the covid period, in a sector which is usually considered quite volatile. But their track record seems interesting.
I also need to better understand what is the level of their recurring business and the stability of their margins over time.

Some other elements :
- quite liquid stock for this kind of market cap ($ 254m),
- no major asset manager among their main shareholders (Regal used to be in there, but no more major holder since 21/3/23),
- Directors and key management personnel owns 34.9 % of the capital.

PS you can have a look at their last presentation at NWR conference on youtube (26/5/23).
Interesting also because it includes the Q&A part.

Expand

An understated asset in Duratec is the 49% ownership of DDR (Aboriginal owned contractor).

I do a lot of government tenders. They all require Aboriginal statements such as connections to supply nation and %employees who are first nation. DDR is a highly strategic connection in winning government and large corp. work and a bit better margin results.

I old for the longer term

DUR Price at posting: $1.06 Sentiment: Buy Disclosure: Held
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