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Australian Engineering & Mining Services M & A Activity

LCC Asia Pacific's weekly market update on the Australian engineering, mining services and infrastructure services sector - including updates on valuations, deal activity and commercial developments

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Australian Engineering & Mining Services M & A Activity

  1. 1. ASX200 INDEX Australia Week Ending 28 May 2021 Date Published 31 May 2021 Edition 405 Australian Engineering, Contractors & METS Providers Market Performance – Edition 405 – US Infrastructure Led Budget Looking to Australian Commodities M&A Rumour, Industry News and Private Activity LCC Australian Contractors Index® WWW.LCCASIAPACIFIC.COM WINNER: BOUTIQUE INVESTMENT BANKING FIRM OF THE YEAR LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Page 1 Sources: Thomson Reuters Eikon, LCC Research, AFR S&P/ASX200 jumped 2.1% last week reaching a new record high following a 1.2% increase on Friday. Major banks led the gains with diversified miners closing the week higher as a rise in base metals offset a fall in iron ore prices. Mining and energy stocks rose sharply on Friday amid speculation that US President Joe Biden is planning an infrastructure friendly A$7.7 trillion budget. Index Percentage change Fixed income Yield Change in basis point Week YTD 12-months Week YTD 12-months (Australia) S&P / ASX200 2.1% 9.0% 22.7% (Australia) 2-year gov bonds 0.07% (0.01) (0.00) (0.20) (Japan) Topix 2.2% 7.9% 23.5% (Australia) 5-year gov bonds 0.82% (0.01) 0.49 0.42 (Singapore) FTSE Strait Times Index 1.9% 11.8% 26.4% (Australia) 10-year gov bonds 1.63% (0.04) 0.66 0.75 (Hong Kong) Hang Seng 2.3% 7.0% 25.9% (South Korea) Kospi 200 0.9% 9.4% 58.8% Rate Week YTD 12-months (US) S&P 500 1.2% 11.9% 38.8% AUD to USD 0.7713 (0.2%) 0.1% 16.2% (US) Dow Jones Industrial 0.6% 1.3% 6.3% (UK) FTSE 100 0.1% 8.7% 12.9% (100%) 0% 100% 200% 300% 400% 500% 600% 700% 800% 2013 2014 2015 2016 2017 2018 2019 2020 2021 LCCASCPI ASX200 The LCC Australian Contractors & Service Providers Index continues to perform strongly against other sectors and the ASX 200 Index and is detailed below left. LCC Australian Contractors & Service Providers Index® CIMIC (CIM.AX) announced an off market takeover bid for the remaining shares in Devine (DVN.AX) for $0.24 per share. CIMIC currently holds 59.11% of Devine share on issue. The bid represents a 100% premium to DVN’s last close price and a total outlay of ~A$15.6m. Minority shareholders in DVN have pushed ASIC to investigate how management ran the company amid allegations that CIMIC was forcing losses to keep share price low and boost income in core CIM construction businesses. Engenco (EGN.AX) announced that it executed an agreement to acquire all of the shares of Eureka 4WD for a consideration of A$4.5m. The acquisition price for Eureka represents a an FY20 EBITDA multiple of 2.6x and is expected to be EPS accretive for Engenco. EGN management cited their motivation for the acquisition was to strengthen their existing registered training organisation and expand Eureka’s services in Western Australia. Other key pieces of news from the Australian Engineering and Mining sectors: • ALS (ALQ.AX) have increased their capacity to test samples of commodities by 15% as a reaction to a substantial increase in mining activity. The company has received an increase of 19% in copper and gold samples to test. • MaxMine, a mining data management solution, has sold a quarter of their business to Viburnum Funds for an undisclosed amount. Viburnum are seeking to expand data analytics in the Australian mining sector. • The Department of Industry, Science, Energy and Resources have announced they will work with Australian METS companies to conduct a Patent Accessibility Review to improve the IP system in Australia. • The Western Australian Government has provided A$1.5m for the states METS companies that are advancing net zero emissions mining projects. 4000 4500 5000 5500 6000 6500 7000 7500 '15 '16 '17 '18 '19 '20 '21
  2. 2. Sources: Thomson Reuters Eikon, Company Announcements, LCC research News Headlines and Key Sector Developments WWW.LCCASIAPACIFIC.COM LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report WINNER: BOUTIQUE INVESTMENT BANKING FIRM OF THE YEAR We are driven to improve our technical knowledge of the Resource Services, Oilfield Services, Electrical Services, Infrastructure Services, Engineering and Resources Sectors, and seek to be an active member within key industry peak bodies. Not only does this strategy reinforce our fundamental enjoyment and drive to better service clients within these Sectors, but it allows us to continually build deep operational and business knowledge of both broad and niche industries. This differentiates LCC from other Advisory Firms as we deliver much more to the Client Leadership Team and Board of Directors than “commoditised” transactional experience and “general advice” LCC’s Sector Association Involvement Page 2 Ticker News/ Event Ticker News/ Event CIM CIMIC have announced a Takeover Bid of Devine Limited for A$0.24 per share VRS Veris has appointed David Murray as a Non-Executive Director CIM CIMIC’s contractor UGL selected for M6 Motorway which will generate revenue of ~A$1.95bn ALQ ALS announced results and a distribution of A$0.146 per share CVL Civmec announced strong results and expansion of Port Hedland Project in WA BLY Boart Longyear presented their CEO review of the company’s activities EGN Engenco acquired Eureka 4WD for a total consideration of A$4.5m MSV Presented a 1H21 results overview which triggered a positive share price reaction of 10.5% FWD Fleetwood is undertaking an employee share buy- back scheme. The consideration to be paid will be approximately A$1.68m PPK Change of directors interest in Li-s Energy. PPK Directors committed $1.25m off market for their total interest in the subsidiary Offshore & Oilfield Oil & Gas Services News – Australia & Abroad • Civmec limited (CVL.AX) delivered strong Q3 financial results delivering 92.6% revenue improvement over the 2020 Q3 and bottom line improvement of 121.9%. The company also announced they will establish a permeant Civmec owned and operated facility in Port Hedland in the Pilbara region. • ALS (ALQ.AX) delivered their FY21 financial results which included a revenue fall of 5.0% from FY20 due to the impact of the pandemic. However, ALS highlighted an EBITDA margin expansion across all three divisions demonstrating strong cost management and a recovery in sample volumes in H2 FY21. • Boart Longyear presented their CEO review and 2020 results at their AGM. Notable results include a decline in revenue of 11% compared with the previous year and a high Net Debt/EBITDA ratio of 10.4x Mining, Equipment, Technology & Services Sector (METS) Updates • Australian energy major Woodside announced plans to bring 50MW of solar energy to Pluto LNG facility for Western Australia’s Burrup Peninsula green energy push. The proposed project would comprise of more than 210,000 solar panels, making it the largest solar project in Western Australia. • Engineering and maintenance services specialist Sparrows Group has secured a contract with Chevron for work on the Gorgon and Wheatstone natural gas facilities in Australia. Sparrows will conduct inspection and maintenance services for cranes and lifting equipment. • Australian mineral exploration company WA Kaolin has signed a 15-year contract for the supply of LNG for it Wickepin Kaolin project. The contract is valued at circa A$22m over the full period.
  3. 3. LCC Australian Contractors & Service Providers Index® (LCCACSPI) WWW.LCCASIAPACIFIC.COM The LCCACSPI Index is starting to show that “V” shape recovery, with the iron ore price actually driving value past pre-covid levels. Market Data Since 2011 Rolling 1 Year Market Data Market Data Since 2011 Rolling 1 Year Market Data LCC index is continuing to strongly outperform vs the ASX200, despite the continued uncertainty over the economic environment. All sectors changing track onto a positive path again, with risks of second wave and stagnant growth seemingly decreasing. Mining Services continues to outperform many other sectors, the industry seemingly weathering the second wave of global virus outbreaks, and negative global economic sentiment. WINNER: BOUTIQUE INVESTMENT BANKING FIRM OF THE YEAR LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Sources: Thomson Reuters Eikon, LCC Research Page 3 (10%) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 LCCASCPI ASX200 (100%) 0% 100% 200% 300% 400% 500% 600% 700% 800% LCCASCPI ASX200 (50%) 0% 50% 100% 150% 200% 250% May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 LCCASCPI Engineering Services Mining Services Others (200%) 0% 200% 400% 600% 800% 1,000% LCCACSPI Engineering Services Mining Services Others
  4. 4. ASX-Listed Companies LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Sources: Thomson Reuters Eikon, LCC Research WWW.LCCASIAPACIFIC.COM WINNER: BOUTIQUE INVESTMENT BANKING FIRM OF THE YEAR Page 4 Ticker Company Name Market Cap (A$ m) Open Price (A$) Close Price (A$) Week High (A$) Week Low (A$) Volume Trend EV/ EBITDA EV/ EBIT Engineering Services ACF.AX Acrow Formwork and Construction Services 80 0.36 0.36 0.37 0.36 — 0.0% 6.5x 13.8x AJL.AX AJ Lucas Group Ltd 32 0.03 0.03 0.03 0.03 ▼ (3.6%) 5.1x 7.0x BOL.AX Boom Logistics Ltd 60 0.15 0.14 0.14 0.14 ▼ (3.4%) 2.9x n.m. BPP.AX Babylon Pump & Power Ltd 26 0.02 0.02 0.02 0.02 ▲ 4.5% n.m. n.m. BSA.AX BSA Ltd 139 0.32 0.32 0.33 0.31 — 0.0% 13.9x n.m. CDD.AX Cardno Ltd 269 0.75 0.69 0.72 0.67 ▼ (9.8%) 5.3x 11.5x CIM.AX CIMIC Group Ltd 6,654 21.49 21.30 21.08 20.66 ▼ (0.9%) n.m. n.m. CVL.AX Civmec Ltd 290 0.56 0.59 0.57 0.53 ▲ 11.3% 6.8x 8.9x DCG.AX Decmil Group Ltd 67 0.52 0.52 0.52 0.52 — 0.0% 2.2x 2.7x DOW.AX Downer EDI Ltd 3,997 5.44 5.68 5.60 5.43 ▲ 5.2% 6.5x 15.5x EGN.AX Engenco Ltd 173 0.55 0.55 0.55 0.55 ▲ 3.8% 10.1x 17.5x FWD.AX Fleetwood Ltd 233 2.33 2.45 2.35 2.30 ▲ 5.2% 5.1x 11.3x GNG.AX GR Engineering Services Ltd 214 1.25 1.33 1.23 1.12 ▲ 6.4% 8.7x 10.2x JLG.AX Johns Lyng Group Ltd 967 4.39 4.30 4.40 4.22 — 0.0% 19.5x 23.9x LLC.AX LendLease Group 8,541 12.13 12.36 12.20 11.94 ▲ 2.8% n.m. n.m. LYL.AX Lycopodium Ltd 219 5.46 5.49 5.48 5.33 ▲ 0.5% 4.9x 6.3x MCE.AX Matrix Composites & Engineering Ltd 15 0.14 0.15 0.14 0.13 ▲ 16.0% n.m. n.m. MND.AX Monadelphous Group Ltd 966 10.01 10.16 10.12 9.84 ▲ 1.1% 12.5x 22.5x PGX.AX Primero Group Ltd 100 0.54 0.55 0.54 0.54 — 0.0% n.m. n.m. RDG.AX Resource Development Group Ltd 130 0.05 0.05 0.05 0.05 ▼ (8.0%) 55.1x n.m. SND.AX Saunders International Ltd 78 0.75 0.76 0.76 0.75 ▲ 0.7% 10.5x 14.6x SRG.AX SRG Global Ltd 233 0.47 0.52 0.50 0.47 ▲ 11.8% 12.4x n.m. SSM.AX Service Stream Ltd 404 0.89 0.98 0.90 0.83 ▲ 8.3% 4.8x 7.2x SXE.AX Southern Cross Electrical Engineering Ltd 129 0.52 0.52 0.52 0.51 ▲ 1.0% 4.3x 5.8x SOP.AX SML Corporation Ltd 23 0.08 0.08 0.08 0.08 ▲ 8.1% n.m. n.m. TPP.AX Tempo Australia Ltd 29 0.07 0.08 0.08 0.07 ▲ 1.3% 19.0x 181.3x VMG.AX VDM Group Ltd 17 0.00 0.00 0.00 0.00 ▲ 25.0% n.m. n.m. VMX.AX Valmec Ltd 43 0.35 0.34 0.35 0.34 — 0.0% 7.8x 17.2x VRS.AX Veris Ltd 38 0.08 0.07 0.08 0.07 ▼ (5.2%) 22.0x n.m. WOR.AX Worley Ltd 5,553 11.24 10.60 10.75 10.34 ▼ (4.6%) 8.4x 13.9x ZGL.AX Zicom Group Ltd 15 0.07 0.07 0.07 0.06 ▼ (1.4%) 2.4x 5.2x Mining Services AMX.AX Aerometrex Ltd 85 0.90 0.90 0.90 0.86 ▲ 1.1% 36.3x n.m. ANG.AX Austin Engineering Ltd 79 0.14 0.14 0.14 0.13 ▲ 8.0% 4.5x 6.7x BLY.AX Boart Longyear Ltd 34 0.41 0.38 0.40 0.36 ▼ (6.2%) 14.3x 42.7x EHL.AX Emeco Holdings Ltd 494 0.88 0.91 0.90 0.86 ▲ 2.3% 3.0x 6.0x IMD.AX Imdex Ltd 831 1.93 2.09 2.02 1.88 ▲ 8.3% 14.0x 29.6x IPL.AX Incitec Pivot Ltd 4,502 2.38 2.31 2.33 2.23 ▼ (2.1%) 10.6x 26.6x MAH.AX Macmahon Holdings Ltd 422 0.19 0.20 0.19 0.19 ▲ 5.4% 2.3x 6.3x MIN.AX Mineral Resources Ltd 8,693 43.01 45.90 44.99 42.62 ▲ 6.6% 7.3x 8.8x MLD.AX MACA Ltd 276 0.85 0.81 0.82 0.79 ▼ (3.6%) 3.6x 16.2x MSV.AX Mitchell Services Ltd 84 0.38 0.42 0.41 0.38 ▲ 10.5% 3.8x n.m. MYE.AX Mastermyne Group Ltd 83 0.74 0.78 0.76 0.69 ▲ 7.6% 2.9x 5.6x NWH.AX NRW Holdings Ltd 779 1.70 1.70 1.70 1.65 ▲ 0.9% 3.5x 8.7x ORI.AX Orica Ltd 5,615 13.64 13.75 13.54 13.15 ▲ 1.8% 10.0x 20.4x PPK.AX PPK Group Ltd 1,340 12.44 14.99 14.51 12.00 ▲ 21.4% n.m. n.m. PRN.AX Perenti Global Ltd 470 0.67 0.67 0.66 0.64 — 0.0% 3.3x 29.1x RUL.AX RPMGlobal Holdings Ltd 341 1.49 1.49 1.48 1.42 ▲ 0.3% 45.5x n.m. SWK.AX Swick Mining Services Ltd 49 0.16 0.18 0.18 0.16 ▲ 6.1% 3.4x 67.5x Facilities Management & Services AEI.AX Aeris Environmental Ltd 39 0.17 0.16 0.17 0.14 ▼ (3.0%) 19.0x 21.8x ALQ.AX ALS Ltd 5,863 11.04 12.11 12.03 10.76 ▲ 11.3% 17.0x 25.6x HIL.AX Hills Ltd 31 0.14 0.14 0.14 0.14 ▼ (3.6%) 9.0x n.m. MIL.AX Millennium Services Group Ltd 29 0.63 0.62 0.63 0.62 ▼ (1.6%) n.m. n.m. ENE.AX SKS Technologies Group Ltd 26 0.25 0.24 0.25 0.24 ▼ (2.0%) 8.8x 13.0x TPS.AX Threat Protect Australia Ltd 6 0.03 0.03 0.03 0.02 — 0.0% 10.8x n.m. Weekly change (%)
  5. 5. lccasiapacific.com.au SYDNEY | BRISBANE | NEW YORK LCC Asia Pacific is a boutique investment banking practice, providing independent corporate finance & strategy advice to clients in Australia and across Asia Pacific markets. We have acted for ambitious clients ranging from “emerging” companies, up to Fortune 100 & “Mega” Asian listed entities. LCC Asia Pacific provides clear, unbiased counsel to CEOs and Boards of Directors considering growth strategies, business transformation and challenging corporate decisions. We understand that to service such clients requires a high performance approach, and a tenacity to deliver results. For more information, visit www.lccasiapacific.com.au. © 2019 LCC Asia Pacific Founded in 2004, LCC Asia Pacific is an award-winning boutique investment banking & strategic advisory firm that specializes in the engineering & contracting sector as well as general & specialised services – including mining, drilling, energy & oilfield (onshore & offshore) We provide our clients with key insights on the Engineering, Contracting and Oil Field Services Sectors – assisting with in depth strategy formulation and execution of both organic and M & A engagements About LCC Asia Pacific – we deliver Deal Craft™ Disclaimer This general information has been prepared by LCC Asia Pacific Pty. Limited ("LCC"). The research is based on public information obtained from sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made. Investment Banking Services Strategic Advisory Consulting  Mergers, Acquisitions & Divestments  Equity Capital & Debt Capital Advisory  Balance Sheet Review & Optimisation  Project & Infrastructure Financing  Yellow Metal Financing  Strategic Corporate Investment Planning & Implementation  Consortia Development & Deal Structuring  Joint Venture Design, Partner Selection & Commercial Structuring  Shareholder Disputes & Activism  Independent and experienced advice to Leadership teams and Boards of Directors – including through crisis management  Complex Negotiation Planning & Execution Including For Commercial Contracts & Dispute Resolution  Financial Modelling, Scenario Analysis & Business Case Development  Analysis Of Commercial Arrangements Including Tolling, “Services For Equity” & Royalty Agreements  Tender Research & Preparation Support  Bespoke Industry Specific Research & Data Analysis, including “Benchmarking”  Domestic & Cross Border Market Entry & Exit Planning & Analysis  Mining Technology Research, Recommendations & Implementation  Machine Learning, Artificial Intelligence & Predictive Maintenance WWW.LCCASIAPACIFIC.COM Nicholas Assef Engineering, Contracting & METS Sector Lead + 61 498 115 054 naa@lccapac.com

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