Interim result today shows 41% increase in revenue to 316m but...

Interim result today shows 41% increase in revenue to 316m but 16% decrease in NPAT to 7.6m. Hence, RCR margin is just above 2% and extremely low for this industry. Main problem has been NSW. RCR have sacked the NSW management and implemented strict cost controls across all 4 sectors. EPS for 1H09 is 6.1c.

Solid order book, confirmation of 15% organic growth over FY09, start-up of pluto project will (i expect) see a jump in NPAT for 2H09 to about 12c. This would produce a total EPS of 18.1c=PE 1.88 on SP of 34c. Even assuming RCR is unable to increase profit in 2H09 an EPS of 12.2c=PE 2.8. I expect 5c div to be maintained in August. RCR historically have not paid an interim divs.

FY09 rev will exceed 590m. Not hard to make 3% margin = 20m profit now that costs have been severely monitored. Cashflow up 79% in half yr also helps.