Shares on issue post offer: 120 million Offer price: $1Close:...

Shares on issue post offer: 120 million
Offer price: $1
Close: $1.60 (VWAP $1.54)
Website: http://www.scee.com.au/

SOUTHERN Cross Electrical Engineering (SCEE) was established in 1978 and has become a leading supplier of large-scale electrical and instrumentation-installation services.
Much of its growth has come with the help of the China-fuelled commodities boom as most of the company's clients are in the commodities and infrastructure sectors. SCEE is now planning to list on the Australian Securities Exchange.

"What makes SCEE stand out is an impressive list of long-term blue-chip clients," says Simon Guzowski, senior equities analyst at wise-owl.com.

"Once this company gains a client, it has a pleasant tendency to keep that client.

"Examples include BHP Billiton, which has been a client for 22 years, Monodelphous, a client for 21 years, Fluor and Lycopodium, clients for 20 years, Alcoa and Rio Tinto, clients for 19 years, as well as Newmont, a client for 18 years.

"That's a sticky client list that reads more like a who's who of mining."

Most importantly for SCEE, its growth in China and India is continuing at a break-neck pace, which suggests that commodity prices have a good chance of remaining at historic highs. This should keep the miners, and in turn SCEE, very busy not to mention profitable. In order to capitalise on these buoyant conditions, SCEE is looking to target rapidly growing offshore markets to fuel expansion. India, Brazil and the Middle East are all regions where SCEE's expertise as a remote operator could give it a competitive advantage.

As the company has already established a very high market share in the Australian market place, this overseas expansion will be critical for the businesses ongoing success.

SCEE is also seeking opportunities to smooth out its revenue streams by growing its service offering in the repair and maintenance of machinery.

Listing the business will strengthen its balance sheet and make it easier to make acquisitions or expand.

"As always, there are important risks to consider before throwing your hard-earned dollars at this one," Guzowski says.

"Commodity booms have historically ended unexpectedly, so there are no guarantees the current boom will continue."

SCEE also gains a large portion of its revenue from a relatively small group of long-term clients, so the loss of one major client will make a big hit to the bottom line.

"Acquisition risks and labour shortages could also emerge as ongoing challenges for the group," says Guzowski.

http://www.theaustralian.news.com.au/story/0,25197,22770417-5001942,00.html