Emeco Shares Rebounded To Track The Upward Trajectory

  • Oct 30, 2018 AEDT
  • Team Kalkine
Emeco Shares Rebounded To Track The Upward Trajectory

Emeco Holdings Limited’s (ASX: EHL) share price has gone straight up to close at $0.280, today. The extensive growth strategies of the company have witnessed a strong support of investors as more than 15 million shares traded hands today to report the upsurge of 7.692% or $0.020 in daily price change.

In the recently released 2018 Annual Report, the management has drawn an additional growth outlook for the Fiscal 2019. Company’s full year revenues and earnings  are expected to rise further underpinned by significant increase in utilization and rates, additional retail maintenance services, and the full year contribution from recently acquired Force Equipment and Matilda Equipment.  

The strong operating utilization reported in FY18 has empowered the company to advance the rental rates and achieve further increase in operating utilisation while maintaining the cost discipline. Further, the new project wins and expansion in Emeco’s current project scope are leading the growth of FY19.

During the Fiscal 2018, Emeco has generated operating cash flow of $178.2 million and ended the year with better net debt / pro forma run rate operating EBITDA of 2.0x. The strong cash flows and deleverage has positioned the company to renew the fleets as required, take advantage of growth opportunities in the market and refinance the debt on attractive terms.

It seems last year results have grabbed investors eyeballs as the company has flagged a return to profitability for the first time in past five years. This translates the increase in company’s operating profit from previous year’s negative NPAT of $90.9 million to profit of $20.1 million NPAT in FY18.

Earnings during the financial year 2018 jumped almost 6 times on previous corresponding period, i.e. FY17. If you look at the numbers, EBIT has increased 593% to $83.2 million, EBITDA has gone up 83% to $153.0 million and operating EBITDA margin was up 440bps to 40.2%, driven by increased scale and continued cost reduction initiatives.

These results underline the aggressive acquisition-led growth strategy followed by the Mining and construction equipment company Emeco. In July this year Emeco has completed the acquisition of a national equipment rental company, Matilda Equipment. The company specializes in individual high margin rentals of high demand, late model ancillary equipment, thereby providing Emeco with a channel to sustain its ongoing capex requirements for such assets. Andy’s Earthmovers and Orionstone fleet business and Force Equipment, a high-quality low hour machine provider, are among the major acquisitions that Emeco has made during the previous year.

The Annual General Meeting of Emeco Holdings Limited is slated to be held on 15 November 2018. The resolution on shareholder’s approval for issue of shares under the Emeco Hybrid Incentive Plan to the Managing Director and Chief Executive Officer will be the highlight of the meeting.

Over the past one-year the share price of Emeco Holdings Limited (ASX: EHL) has gone up by 11.56% but it is drifting lower since the last three-months. At the end of today’s trade, 30 October 2018, PE multiple was 60.470 x with market capitalization of $826.5 million.


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