While not strictly a material announcement the contract win is the 18th such win in the past 12 months (totalling ~A$140m – see table 1 below) and continues to reinforce IDL’s ongoing ability to win good margin work in its high-end coal safety related businesses. A key point that should be noted is that it is the 9th new customer that IDL has added in China this calendar year and there is plenty of scope to expand the size of each of these customers after the initial sales are delivered and the client becomes more familiar with both IDL and the full range of products that it has available.
The revised DCF valuation is $0.56 per share (WACC 13.0% and fully diluted for the convertible note maturing March 2011).
IDL Price at posting:
$1.41 Sentiment: Buy Disclosure: Held
