Civmec - Maybank Research 2023-01-10: Order Book Boost

Civmec - Order Book Boost

  • Civmec (SGX:P9D) has clinched a major contract worth >AUD330m (represents more than 1/3 of our order win assumption) for the Rio Tinto Western Range Project at Rio’s Paraburdoo site in the Pilbara region of Western Australia. This lifts Civmec’s order book above AUD1.15b, and will provide clear revenue visibility for at least the next 12 months.

Testament to long-standing relationship with Rio

  • See Civmec's announcement dated 09 Jan 2023 – The iron ore project includes both greenfield and brownfield scope with the construction of a new Run of Mine (ROM) pad, primary crushing facility, overland conveying circuit and modifications to the Coarse Ore Stockpile (COS) and downstream conveying system.
  • The greenfield scope comprises a new primary crushing facility, discharge conveyor and transfer station and a 17 km overland conveying system that transfers the ore through to the existing Paraburdoo COS.
  • To tie into the existing plant, the brownfield scope includes extensive modification to the current Paraburdoo COS and downstream conveying system.

Project scheduled for completion in 1H FY25

  • Civmec will complete a vertical package of work that will utilise most of its in-house capabilities.
    • From the Henderson facility, the group will carry out the heavy engineering requirement for the structural and platework fabrication and where viable will assemble modules for transportation to site.
    • On site, Civmec will deliver the detailed earthworks, civil and concrete components, as well as the structural, mechanical, piping (SMP) and electrical and instrumentation (E&I) installation.
    • The off-site works will start immediately, while mobilisation to site is due to commence mid-2023.
  • At peak, the project will employ over 400 people on site and is currently targeted for completion in 1H FY25.

Tendering activity remains robust across all sectors

  • According to management, tendering activity across all its key sectors remains buoyant in FY23. Notably, there are a number of large contracts that the group is actively tendering for work commencing from end-FY23.
  • Despite the uncertain macro environment, we understand that visibility of upcoming projects for existing clients is good and there are no indications from clients that future project plans are likely to change.
  • We retain our BUY rating and 12-month target price of S$0.94 for Civmec, still pegged at an undemanding 10x FY23E P/E.
  • Key re-rating catalysts are stronger-than-expected order wins and continued margin expansion.

Eric Ong Maybank Research | 2023-01-10

Previous report by Maybank:
2022-10-27 Civmec - Off To A Good Start.

Price targets by other brokers at Civmec Target Prices.
Listing of research reports at Civmec Analyst Reports.

Relevant links:
Civmec Share Price History,
Civmec Announcements,
Civmec Dividends & Corporate Actions,
Civmec News Articles

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