GR Engineering guides to higher FY22 revenue

By Market Index
Wed 22 Jun 22, 2:32pm (AEDT)

Key Points

  • Share price was up 5.11% in early afternoon trading
  • The group guided to higher full year revenue of $620m-$640m
  • The group paid a fully franked interim dividend of 9.0 cps

GR Engineering (ASX: GNG) was up 5.11% in early afternoon trading after the WA smallcap engineering company guided to higher FY22 revenue of $620m-$640m, versus previously forecast revenue of between $580m and $600m.

Managing director Geoff Jones attributes the upward revenue revision to a strong year-to-date performance and pipeline of work, and believes the group remains well placed to maintain its strong dividend yield through FY23 and future years.

The group will report its FY22 results around August 23.

Recent contracts

Today’s revenue upgrade follows an announcement late May that the group’s subsidiary, Upstream Production Solutions Pty Ltd (Upstream PS) had its current contract with the Department of Industry, Science, Energy and Resources of the Australian Government (DISER) extended by four months.

Based on the current budget, revenue from the Contract Extension was expected to be around $45m.

News of the contract extension coincided with a preliminary works agreement with Bellevue Gold Limited (ASX: BGL).

Other more recent contracts include Thunderbird Operations for $179.5m, and Kimberley Mineral Sands Pty for $179.5m.

Half year

Year-to-date, the group’s share price is up 19.68%.

Continuing the strong momentum generated from the previous financial year, the group reported record first half FY22 revenue of $302.3m, versus 176.3m in first half FY21 and earnings (EBITDA) of $24.3m, versus 14.2m in first half FY21.

Project execution levels were higher during the first half FY22, with multiple project completions expected during the 2022 calendar year, while subsidiaries Upstream Production Solutions Pty Ltd and Mipac Pty Ltd also provided solid contributions to the consolidated results.

Cash at bank at 31 December 2021 was $93.6m.

The group paid a fully franked interim dividend of 9.0 cps.

Argonaut Securities has a Strong Buy on the stock.

Based on Morningstar’s fair value of $2.21 the stock appears to be undervalued.

The top 20 shareholders of the group hold 79.86% of shares on issue.

GR Engineering share price over 12 months.


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Market Index

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