insto's, page-9

ord minnett changed from a hold to a accumlate today

********************YESTERDAY

Company: Industrea Limited
ASX Code: IDL
Recommendation: HOLD
Risk Rating: High

Result A solid result that falls within IDL's stated guidance range.

Revenue: OML(f) $321.5m vs. Actual $313.2m (-2.6%)

EBITDA: OML(f) $114.7m vs. Actual $112.1m (-2.2%)
Adjusted NPAT: OML(f) $ 52.1m vs. Actual $ 49.1m (-5.6%)
Full Year DPS: OML(f) 1.3c vs Actual 1.3c (+0.0%)

Final Dividend 1.0cps (pcp 1.0cps) fully franked with a Record Date of 14 Oct, Payment Date 5 Nov.





Result Highlights:
EBITDA of $112.1m was up 11.5% on pcp and roughly in line with OM forecasts.



Adjusted NPAT of $49.1 up 8% on pcp and in-line with IDL's $48-$54m guidance range. OM forecast was for $52.1m and at this stage it looks all of the difference can be explained within the adjustments and in particular the adjustments that roll through this year due to the very large tax effects.



Net operating cash flow of $64.779 were a significant improvement on both pcp ($43.291) and the 1H result.



The net debt position was $180.9m (including the convertible bond) and was spot on expectations.



The final dividend was 1.0cps as expected with a Record Date of 14 Oct, Payment Date 5 Nov.


Outlook Commentary:
Key comment was that IDL has "started FY11 on a robust footing following contract wins in July and August 2010 with Chinese coal miners".



The only comment in relation to guidance was that Management has a "positive long term outlook and expect to report an increase in revenue and operating profit for FY11".



Research note to follow.

Cheers




********************** TODAY*****************
Industrea (IDL)
Accumulate (from Hold) / High Risk



Note attached. Key points:



Industrea Limited (IDL) has reported an Adjusted NPAT of $49.1m (pcp $45.4m) which was at the lower end of the companys guidance range ($48m-$54m).

Operating cash flow improved to $64.8m (pcp $43.3m), largely due to a one off favourable tax treatment of $20.2m.

A final dividend of 1cps was declared - Record Date 14 Oct, Payment Date 5 Nov the DRP is active. The full year FY10 dividend was 1.3cps (pcp 1.25cps).

IDL provided some commentary around the convertible bond issue. It is expected that the remaining $40.4m due in March 2011 will be paid out in full using a combination of cash flow and debt and OM is confident that this will be achieved.

At the operational level all three divisions performed strongly, particularly in the second half with revenues up 21.4% half on half (pcp -22.0%).

The momentum from the 2H is expected to carry through to FY11 with IDL stating that it expects to report an increase in revenue and operating profit for FY11.

OM made only modest adjustments to sales and EBITDA of circa 1% to 3%, however, changes to amortisation assumptions has reduced OMs forecast Adjusted NPAT for FY11 and FY12 by 4.7% and 5.8% respectively.

The revised DCF valuation is $0.55 per share (WACC 13.5%).

At $0.35 IDL is trading at an FY11 PER of 6.6x and at a dividend yield of 4.0%.

IDL continues to trade a significant discount to market multiples and its valuation. OM is of the view that as the convertible issue dissipates this discount will be eroded. As a result OM has upgraded its recommendation to an ACCUMULATE