I saw a comment from a member about RCR being a mining/resource based contractor. That prompted my first response. First they are not a contractor - they are a consultant who make money by providing a consultancy service to the industry. Secondly, they are no longer a pure resource/mining based consultancy business. In 2014, their sales increased by 49% (during the mining downturn) to $1.3 Billion - Their annual report claim "Revenue increased by 49% to $1.3B, with more than two thirds generated from our Infrastructure and Energy businesses.". This highlights the shift in RCR's strategy to utilise their human resources to diversify into other areas. There is another consulting business (MND) doing the same. They are diversifying...a right move but a real headache for others (like us) already in the market. They have expanded their operations outside Australia into NZ and Asia and may have plans to grow even beyond that. They have been around for longer than 100 years but appears to have taken a safer (low risk) growth path than others.
RCR is not big in-terms of their sales or size - their overhead costs appears to be smaller than their competitors - so they can undercut the big boys and keep on diversifying. They are just starting to get into Water and Environment Infrastructure business - which rarely has boom/bust cycles like resources or buildings/road infrastructure businesses.
RCR probably will end up taken over by one of the global giants who is keen to kill the competition and/or expand their foot print. If you look at the the players in the Australian market, there aren't many Australian companies left - global giants from North America and Europe are gobbling up the Australians to expand their brand and business into Asia Pacific Region.
The company I long worked for was founded in Sydney in the late 1960s by two gentlemen and grown to be bigger than RCR ($1.8B sales and 7,000 staff globally) by 2013. We had no debt and well regarded and respect in the industry - however felt we couldn't survive on our own for long - eventually bought out by a global giant (100,000+ staff) in 2014. We were a privately owned company and our shares were valued at $200 each - global companies were prepared to pay much more than the book value and ended up being bought out for $1200 a share. I am not suggesting that RCR will get that sort of attention as they are not that well known as my previous company. However the potential is there for a large windfall with a take over offer for RCR in the future.
Their PE ratio is low and the average broker consensus value is much higher than currently traded values.
I believe they are going through a technical correction now - fundamentally they appear to be a sound company. If they bounce off the recent lows ($1.60), I may buy to ride the next wave - hence my "Buy" sentiment.
Apologies for the long post.
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