Structural Systems must be one of the cheapest listed companies...

Structural Systems must be one of the cheapest listed companies working in the mining and civil engineering sectors. The shares hit $3.70 just prior to the global financial crisis but are currently wallowing around 52.5 cents.

They ran into problems with their Formwork division which had cost overruns and project rectification problems but that appears to be behind them now. They have sold the division, appear to have worked through the problems and in their latest update in mid June they announced a strong profit for the second half and the likelihood of a return to dividends.

Consider the earnings per share as shown in the table below:

Structural Systems Earnings per share
Year	1st half	2nd half	Total
2006/2007	8.4c	11.9c	20.3c
2007/2008	14.8c	13.1c	27.9c
2008/2009	10.8c	7.3c	18.1c
2009/2010	-4.5c	6.8c forecast	2.3c

The loss in the first half of 2009/2010 was solely due to the problems with the formworks division and the fall in profits in 2008/2009 can be attributed to those problems as well.

If Structural Systems can return to the profitability it showed in 2007/2008, it would be selling on a Price Earnings ratio of less than 2 at current prices. Even if it can only continue to achieve the results of the latest half then it is selling on a PE of less than 4. The Net Tangible Assets at the December half were 66c and should be over 70c now following the return to profitability in the second half so it is selling at a price of approximately 70 percent of its NTA. It has a strong balance sheet due to an institutional placement and a share purchase plan done at 78c in September 2009. For the value investors, to quote Paul Keating, "its a beautiful set of numbers".

This Company has been on the ASX for more than 20 years. It has defined a role for itself in several niche markets including rock drilling and post tensioning. It has consistently performed well in those areas and has only run into problems when it has strayed away from its core areas of strength. It has a strong order book now in those areas of strength and a solid balance sheet to go forward.

For those interested in charting, it has recently broken out of the downtrend that it has been in since last October.

It is well worth a look.

GPASAS