Emeco Holdings Limited (ASX: EHL)
Founded in 1972, Emeco Holdings Limited is a publicly listed industrial sector company. It is involved in renting, maintaining and selling heavy earthmoving equipment to customers including mining companies and contractors across gold, coal, copper, iron ore and bauxite.
Emeco’s long term value creation model is focused on differentiating Emeco to create a competitive advantage by being the highest quality and lowest cost provider of earthmoving equipment services to drive value through the cycle. Typically, Emeco invests in mid-life equipment to optimise the use of capital, which in turn delivers increased return on assets and cost advantage over competitors.
Emeco’s long-term value creation model (Source: Company Presentation)
In the recent update, the company released its Fiscal 2019 guidance, as per which FY19 operating EBITDA is expected to be in the range of $211 million to $213 million, up almost 40% from FY18. Emeco also presented optimism towards the future market conditions, stating its outlook for FY20 remains strong, with total material movement continuing to increase and equipment supply remaining tight.
Further, it expects FY19 EBITDA margin and ROC to stand within the range of 46%-47% and at ~20%, respectively. ROC forecast represents the highest return since the company’s IPO, up from 13% in the previous cycle peak (FY12) with headroom for further upside through increased rental rates and utilisation.
Emeco historical and forecast returns (Source: Company Presentation)
Emeco has placed its growth assets in the Eastern Region to meet strong customer demand where it particularly experiences strong demand from East Coast coking coal; Emeco’s coal exposure is now approximately 2/3rds coking, 1/3rd thermal. Thermal coal now contributes less than 25% to Emeco’s total revenue, with Emeco’s thermal coal customers being tier 1, lowest cost, highest quality exporters.
On 17 June 2019, Emeco announced the change of interest of substantial holder- Paradice Investment Management Pty Ltd. As per the notification, Paradice shareholdings in Emeco has increased from 7.446% to 9.047%, effective 12 June 2019.
EHL is trading at $1.920, up 8.782%, on 17 June 2019 (12:59 PM AEST). Over the past 12 months, the stock has declined by 50.28%, including a negative price change of 13.05% in the past three months. Read Will Recent Uptrend of Emeco Holdings Sustain?
Cleanaway Waste Management Limited (ASX: CWY)
Headquartered in Melbourne, Cleanaway is a waste management company which focuses on providing sustainable solutions to Australian businesses, communities and industries in accordance with their requirements. Its services range from turning food waste into a nutrient-rich soil enhancer, industrial waste removal to delivering innovative and bespoke recycling solutions.
Cleanaway operates through three segments – a.) Solid Waste Services, b.) Liquid Waste and Health Services, and c.) Industrial and Waste Services. It enjoys diversified exposure to Australia’s growing waste management and resource recovery market.
Positioned as Australia’s largest total waste management company, Cleanaway focuses on maximising the value of resource recovery through ‘The Diversion Prize’. Cleanaway explained that the diversion prize is the commodity value plus the landfill cost avoided the minus cost of resource recovery, thereby representing the resource recovered material which needs to go into a circular economy to be recycled.
The Diversion Prize Model (Source: Company Presentation)
For 1HFY19, the company reported gross revenue of $1,149.7 million, up 46.4% on 1HFY18, on the back of the contribution of recently acquired Toxfree Solutions. The takeover represents the company’s strategic move to integrate the business of its direct competitor within the same industry and derive benefits from synergies.
Vik Bansal, Chief Executive Officer and Managing Director of Cleanaway, stated that the company remains confident to deliver $35 million of synergies from the Toxfree’s acquisition. He further added that the acquisition of Toxfree and the several strategic initiatives are in line with the company’s target of Goal Zero.
Going forward, the company expects its earnings momentum to remain positive underpinned organic growth and further realisation of synergies.
CWY stock is trading at $2.360, up 4.425%, on 17 June 2019 (2:02 PM AEST). The stock has surged up by 35.74% in the past 12 months, including an upside of 5.61% over the past three months.
Nanosonics Limited (ASX: NAN)
Nanosonics Limited is an ASX-listed healthcare sector company that is positioned as a leader in infection control solutions, with its proprietary technology ‘trophon®2’. The company has received an overwhelming response from customers on the successful launch of its trophon®2 technology in North America, Australia and Europe in 2018.
Nanosonics stated that “Customer reaction to the trophon® 2’s benefits and new features has been so positive that its adoption over trophon EPR is increasing every month since launch.”Nanosonics’ trophon®2 technology (Source: Company Website)
Subsequently, the company registered record first-half sales of $40.7 million during the six-month ended 31 December 2018, up 36% on the prior corresponding period. The upside momentum is underpinned by the strong installed base growth with global installed base increasing to 19,310, up 20% in the last twelve months and 9% in the last six months. This means that thousands of patients are protected from the risk of cross-contamination each day because their probe has been high level disinfected using a trophon system. Operating profit before tax stood at $11.0 million, reflecting an increase of 195% on previous corresponding period and 493% on the prior half.
The company’s distribution agreement with GE Healthcare in the USA will reportedly change to a Capital Reseller model from July 2019, which is expected to result in a material increase during FY20 in both sales and margin from consumables in North America. Moreover, Nanosonics’ 2nd clinical study in Japan is reportedly scheduled to be finished by the end of FY19.
For the full fiscal year 2019, the company expects its operating expenses to be approximately $50 million, including approximately $12 million in Research and Development mainly relating to new product development.
In the recent announcement, the company notified about the retirement of Non-Executive Director Mr Richard England who has informed the Board of his intention not to stand for re-election at the 2019 Annual General Meeting.
NAN is trading near to its 52-week high at $5.240, up 6.288%, on 17 June 2019 (2:49 PM AEST). Over the past 12 months, the stock price has increased by 54.00% with a positive price change of 13.24% in the past three months.
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