Austal Limited Reveals Its Upgraded Revenue Guidance In Investors’ Presentation

Australian shipbuilder, Austal Limited (ASX: ASB) has released NZ investor presentation on 10 May 2019. The world’s largest aluminium shipbuilder provides updates since H1 on full-year guidance, delivered contracts, future deliveries and operational updates.

Austal’s product differentiation capabilities enables it to produce low weight aluminium vessels for military and commercial purposes. Its constant innovation and significant investments in R&D have led to deliver ultra-efficient projects like catamarans and Trimarans.

(Source: Company’s New Zealand Investor Presentation released on 13 May 2019)

ASB is working on the new age technologies like improving fuel efficiency, digitisation of control systems and new low emission fuels including LNG and battery-powered vessels. Austal builds high-speed vessels; another innovation led product include Auxillary Transport vessels. US Navy has ordered LCS Littoral Combat Ships and EPF vessels which are under construction in Alabama shipyard. Navies around the world have shown significant interest in this type of vessel due to its distinctive low cost, carrying capacity and speed.

(Source: Company’s New Zealand Investor Presentation released on 13 May 2019)

This year will mark 20 years of shipbuilding in the USA where Austal houses most efficient aluminium shipyard, providing a competitive advantage in the region. ASB has made noteworthy development in the Asian region with the largest integration facility outside USA in the Philippines. The facilities in Vietnam and the Philippines is currently engaged in manufacturing two large vessels and approximately 230 employees work at the Vietnam plant.

(Source: Company’s New Zealand Investor Presentation released on 13 May 2019)

Strategy & outlook

Existing product suit appears consistent, profitable while order book remains strong. ASB is pursuing non- USA opportunities. The shipbuilder is working on a proposal for the US Navy (Future Frigate Concept) FFG[X] program represents a major growth opportunity for Austal in the USA with a bigger and more sophisticated ship that the Navy budget suggests could be around US$800m each with a requirement for 2 per annum. Contracts secured in March this year for EPF likely to have medical capabilities and a larger version of EPF is also possible.

Austal’s commercial business likely to enter sustained growth period with investments in major capacity expansion and new modern vessel designs places to maintain a significant market share. The Large ferry construction market is running at a record level with almost 70 new build orders, told the company.

Financials’ snapshot:

  • 1HFY19 Revenue up by $201.2 million to $851.5 million, compared to the previous corresponding period.
  • NPAT witnessed a positive change of $0.5 million from $23.2 million in H1 FY2018 to $23.7 million in H1 FY2019 driven by the downward revaluation of deferred tax liabilities following tax reforms in USA.

 

(Source: Company’s New Zealand Investor Presentation released on 13 May 2019)

At the time of writing, 13 May 2019 (AEST 5:06 PM), ASB is up 4.781% to trade at $2.630. The 52-week high and low are A$2.780 and A$ 1.550 respectively with circa 352.79 million shares outstanding.


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