Tox-Free Solutions (TOX) $1.93 CRITERION: Tim Boreham | July 02,...

Tox-Free Solutions (TOX) $1.93

CRITERION: Tim Boreham | July 02, 2009
Article from: The Australian.

THE fundies on the waste manager's register are ruing the timing of yesterday's disclosure of a contract to service Chevron's ginormous Gorgon LNG project.

Unhelpfully, Tox doesn't disclose what the deal's worth, but presumably it's big enough to warrant Monday's trading halt.

Tox groupies knew the deal was coming when Toll Holdings on Monday announced a $180million deal for logistics services to Gorgon's Barrow Island base. This includes waste management and Tox has a sub-deal with Toll to provide these services.

Tox shares yesterday climbed 12.5c (7 per cent) after the trading halt was lifted, in a sulky broader market. If the news had come out before Tuesday's June 30 cut-off, the fundies would have had a nice June-quarter fillip to their portfolio.

Still, we won't allow such short-termism to detract from the deal, which will use Tox's new and under-used Karratha facility.

Maybe it's market trash talk, but we hear the deal is worth up to $10m in revenues, which compares with Tox's expected 2008-09 turnover of $80m, rising to $100m. There's also the prospect of high-margin emergency jobs when someone opens the wrong valve. Tox won a similar contract with Woodside in March.

Tox in April said it expected full-year earnings before interest, tax, depreciation and amortisation of $22m-$24m, shy of the envisaged $26m. Management blames the Victorian bushfires, which hit its acquired Barry Brothers arm.

Criterion had Tox as a long-term buy at $1.65 in May. We maintain the call: Tox will win further WA resources contracts.

http://www.theaustralian.news.com.au/business/story/0,28124,25719391-23634,00.html