Of course, it is good to see that the company is able to grow its order book (as long as they expect to have good margin on new orders). But, it is also probably as important to see if the company is changing towards a less risky profile.
There are some signs that their profile is getting less risky : - acquisition in FY 23 of KL Modular Systems, which is higher margin*, - diversification towards the defence sector, not necessarily higher margin, but with much less risk of payment failure.
During H1 24, the defence sector represented 8.5 % of total project wins (vs 6 % in FY 23), while the modular business represented 4 % of project wins (vs 3 % in FY 23).
* Shape was expecting an EBITDA margin of 10 % for KLMS in FY 23 (vs 2.4 % for Shape in FY 23)
SHA Price at posting:
$1.91 Sentiment: Buy Disclosure: Held
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