Interesting stock that was reviewed...

Interesting stock that was reviewed here:

http://www.smh.com.au/business/logicamms-after-a-greater-slice-of-contracting-pie-20100105-lsdk.html

Logicamms after a greater slice of contracting pie
January 6, 2010
SMALL-CAP investors who put up $1 a share in the Logicamms float two years ago had the thrill of seeing their scrip close at a 47 per cent premium on the first day.

Less than five months later the shares had fallen to their issue price and, as the Great Bear Market gained steam, fell as low as 35.

Not exactly what Adam Keats, the managing director of the electrical and control systems engineering company, had in mind when the group went public.

The scrip has climbed some way back from those lows but remains a touch below its float price.

The company is a work in progress. Keats' aim was to expand Logicamms geographically, and to enlarge its engineering competencies, so enabling it to get a bigger slice of the contracting pie, especially in the resource-rich states. He has done this by buying other companies.

Not long after it listed, the company bought a Queensland-based electrical engineering group that Logicamms said would substantially improve its ability to service the resources sector.

Then in mid-2009, it bought Process Essentials, a process engineering firm.

And last month, Logicamms agreed to pay about $11 million for MPA Consulting Engineers, a civil and mechanical engineer with a blue-chip client base across the resources, energy and infrastructure sectors.

Logicamms is raising $10 million through an 80-a-share placement to help pay for the acquisition, and it seems Alex Waislitz's Thorney Investments and Hunter Hall will both emerge with decent stakes.

The group will have three arms: its original electrical and control systems unit, which aims to get different items of equipment to work together efficiently; process solutions; and civil and mechanical engineering design services.

The challenge for Logicamms' management is to operate the businesses under the one roof and to ensure that there is no earnings slippage.

In the latest June year - which included a weaker than expected first half - pre-tax earnings were up 50 per cent to $6.1 million, which looked impressive enough. But earnings should have been well up on the basis of prospectus and later forecasts.

Results for this financial year will give some guide on how the grand plan to enlarge the group is proceeding; for a start, Keats has said the MPA acquisition will boost earnings by about a quarter.

At 95 a share, Logicamms is worth $57 million - 11 times historical earnings but probably less than seven times earnings one or two years out, if everything goes to plan.