It remains tough to assess companies like Scidev, mainly because they depend on relatively short term contracts : "typically under a 1-3 years fixed term contract for mining and construction" and 3 to 6 months only for oil and gas.
But they are also many sources of growth for their water treatment businesses in the medium/long term :
- change of regulation for drinking water in the US,
- higher oil exploration (depending on oil price direction),
- rainfall,
- increase their exposure to the global mining sector thanks to their JV with Neuer.
One of the main growth potential is about PFAS treatment* which is a significant global market.
For now, Scidev has only domestic operations (with 7 PFAS treatment projects at the moment, mainly in NSW).
2 sources of margin increase :
- gross margin increase (less sales of commodity products and strong growth for water technology, high margin business),
- productivity gains (+ 17 % for revenues/employee in FY 23).
Q4 results (about to be published) will be important as it will confirm (or not) the strong results they reached during Q3 24 (EBITDA of 3.6 m$).
EV/EBITDA is only 5 x (at 0.43 $) if we annualise Q3 results, and even lower if we value their reserve of tax losses.
Q3 did not seem to be a one off, as it was the 3rd consecutive growth (qoq) for their EBITDA (which was already significant at 2.5 m$ during Q2 24).
* water technology division for them
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