PMR is right, companies in this industry are winning new contracts and work orders, receiving extensions and scope changes all the time. Most are not considered material enough individually to announce: e.g. the sub $5m contracts (although there's no set threshold however -all subject to overall earnings levels). Sometimes there might be other qualitative strategic considerations that make the smaller ones potentially price sensitive and announceable,e.g. a new client in a new market etc, on a huge project. So it is probably safe to assume Calibre is winning plenty in this category on a continuous basis.
"in any case this $22m contract is pittance"
What rot! I'll bet it earns more than a $200m FGE contract! :-). Different margins, different risk, oh and what do you know, it's an EPCM contract, the model you said was dead. In fact it looks hugely significant to me for other reasons as well:
- it comes in a crappy environment full of doom and gloom. - it's the first Award following, Rio’s fresh commitment to its Pilbara expansion through low cost brown-fields expansions and announcement of funding approval in yesterday’s results. - Rio announced along with its JV partners they had approved the $599m expansion of its West Angelas Deposit B to lift production by 6mtpa by 2015 (from 29-35 mtpa). - As the announcement states, "it continues Calibre’s long association with Rio Tinto at West Angelas - where Calibre was the EPCM provider for the capacity expansion from 16mtpa to 25mtpa in 2004-2006”. They do look very much like the go to provider for Rio. - and don't forget Calibre is not a one trick pony like many of the players in this space - increasingly diversified end markets and revenue streams - and it looks a lot cheaper than most of them as well. - and did I mention they are a good dividend payer, with ridiculous yields compared to peers? Hope they keep this up of course....
Do your own research. I probably don't know what I am talking about....
CGH Price at posting:
45.0¢ Sentiment: None Disclosure: Not Held
