Industrea (IDL.AX - A$0.44) Buy Target: A$0.552010 ? a tale of...

Industrea (IDL.AX - A$0.44) Buy Target: A$0.55
2010 ? a tale of two halves
? First half of 2010 below expectations, but full year inline
For 1H10, IDL expects normalised NPAT of $17.2-17.8m, down 30% on pcp and below UBSe of $23.7m.
The yoy decline is due to the impact from the cancellation of a large contract within the Mining Services
division and timing of technology sales. However, for FY10, IDL expects normalised NPAT of $48-54m,
which equates to a mid-point slightly above UBSe of $50m.
? Minor revisions to FY10-12 estimates
We have raised our revenue estimates by 8.6-7.4% to reflect a sharper recovery within IDL?s Mining Services
division. Consequently, due to the change in revenue mix, our EBITDA margin estimates have been reduced
by 280-230bps, which results in only a slight increase in NPAT estimates of <1.0% for all 3 years.
? Maintain Buy
Despite outperforming the Small Ords Index year to date by 280bps, IDL continues to trade on a FY10e EPS
multiple of 9.2x. In our view, the current share price does not adequately discount IDL?s strong growth
profile (UBSe 3yr NPAT CAGR of 15%), which should be driven by Industrea?s exposure to domestic and
Chinese coal markets.
? Valuation: $0.55 price target unchanged
With only minor revisions to our short-term estimates, our DCF-derived valuation and price target remain
unchanged.
Super