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Industrial solution provider Coventry Group Limited (ASX:CYG) got hit by bearish market trends after it announced Net Loss After Tax from continuing operation of $2.4 million for the half year ended 31 December 2018. However, it reflects a loss reduction of $2.8 million on $5.2 million loss in 1H FY18, primarily driven by the contribution of newly acquired diversified engineering services provider Torque.
The stock price can be seen trading to its lower level, down 5.063% to stand at $0.750 on 22 February 2019 (2:33 PM AEST). Â
For the first half of Fiscal 2019, sales revenue of the Group increased 5.2% to $89.6 million excluding the discontinued operation of AA Gaskets and the acquisition of Torque. EBIT has shown an improvement of $1.8 million to a loss of $1.5 million for the half year ended 31 December 2018. These numbers are in comparison to the sales of $83.3 million in the 1H FY18 and EBIT loss of 3.3 million in 1H FY18.
Groupâs Net Tangible Asset per security stood at $1.02 per share as at 31 December 2018. The Group has experienced steady growth in both Trade Distribution New Zealand (TDNZ) and Trade Distribution Australia (TDA). It outlines 14.7% improvement in the sales of TDNZ compared to the previous corresponding period, and TDA performance in line with 1H FY18.
Torque acquisition was completed by the Coventry Group on 31 October 2018, thereby expanding the Groupâs Australian presence while positioning Cooper Fluid Systems as a leading engineering services business in South Australia. As per the companyâs information, the acquisition was financially backed by the institutional placement and an entitlement offer which raised approximately $15million following which Torque posted trading results in line with expectation.
Further, the Coventry Group has entered into an agreement to acquire all of the shares of Nubco Proprietary Limited for the purchase consideration of $36.0 million, comprising $34.2 million in cash and $1.8m in new Coventry shares. The acquisition is reportedly expected to complete on 1 March 2019.
The Group has also posted the healthy balance sheet with the working capital position with Current Assets exceeding Current Liabilities by $50.3 million as at 31 December 2018. Its cash position was $8.5 million with no debt as at the end of the period.
Going forward, the company plans to open one new Trade Distribution branch in Rotorua, New Zealand, and two new branches in Australia before the end of Fiscal 2019.
The company reported an optimistic outlook ahead of favourable market conditions in its key market of construction, industrial and mining and resources. Moreover, the Group endeavours to offset the ongoing downturn in the residential housing sector with the growth in the commercial construction market.
CYG is currently trading at a Price to Earnings multiple of 5.230 x with a market capitalisation of $55.46 million as at 22 February 2019. Over the past 12 months, the stock has fallen by 26.36% including a negative price change of 15.34% over the past three months.
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