Civmec - Maybank Research 2023-02-09: Delivering The Goods

• Civmec's 1HFY23 (Jul-Dec 2022) PATMI rose 25% y-o-y to AUD28.2m, beating our and market expectations at 54%/52% of MIBG’s/consensus’ full-year estimates.
• To our positive surprise, Civmec doubled its interim dividend to AUD0.02 on the back of strong cash flow.
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• Key re-rating catalysts include higher-than-expected order wins and continued margin expansion.

Margins continue to improve with more delivery

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• We think margins should remain firm along with greater economies of scale, as well as higher contribution from maintenance & capital works. Currently, this segment accounts for less than 20% of overall revenues.
• In the mid-long-term, Civmec aims to grow its recurring income to ~40%, with the remaining 60% from projects.

Growing orderbook to provide visibility

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