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Objectives & Outlook of Industrial Solutions Expert, Saunders International

  • March 20, 2020 04:56 PM AEDT
  • Team Kalkine
Objectives & Outlook of Industrial Solutions Expert, Saunders International

Since its establishment in 1951, Saunders International Limited (ASX:SND) has been an active contributor to the Australian industrial development, growing from a specialist tank business to a mid-size, multi-disciplined construction, engineering and maintenance business. SND provides leading organisations of the Australia and APAC region with design, fabrication, construction and maintenance services.

Sectors that leverage from the Company’s offerings include bulk liquid storage, industrial, energy, resources, and road and rail infrastructure. SND’s services are deemed to be reliable, innovative and cost-effective, and the Company ensures trouble-free project delivery to its diverse client base.

So, what are these services in discussion? Let’s take a sneak peek-

Saunders’ Wide Range of Service Offerings

SND aims to provide clients with innovative and cost-effective services tailored for their project specifications. Its offerings include-

  • Engineering Procurement and Construction (EPC)- preliminary and detailed design, engineering, procurement and construction, commissioning and the whole of life asset support
  • Civil and Bridge- extensive track record of successfully delivering road and rail bridge projects. Including design and construction and fabrication of major pre-cast components.
  • Tanks- the origin of the business, strong track record in delivery of tank services at most of the Australian refineries, major terminals, mine sites and the water sector.
  • Asset Services- providing general maintenance solutions and shutdown services across the industrial sector.
  • Engineering and Design- detailed design, design reviews and preparation of technical packages for tender.
  • Tank Maintenance- strong track record in delivery of maintenance services in many Australian mine sites and at most of the Australian refineries and terminals.

Now that we understand the business and its approach, let us glance through SND’s objectives and outlook for the new decade.

Saunders’ Objectives- Innovation, Excellence, Growth

Primarily, the Company is focused on ensuring that its clients, which come from wide-ranging industries, attain optimum economic return through maximising the productive capacity of their assets, new or existing.

Addressing shareholders at the Annual General Meeting in October 2019, Chairman Mr Timothy Burnett stated that the pipeline of opportunities for all parts of the business looks positive, which, along with the operational and organisation restructure (essentially completed) supports SND’s objective of return to profitability in FY20. SND has a flat management structure ensuring better controls on projects.

SND’s strategic objectives are classified under four broad heads-

strategic objectives

Let’s understand the Company’s priorities pertaining to its objectives-

The Company aims to expand its national civil infrastructure footprint and develop bridge maintenance business. It is focused on the execution of the two year $30m+ contract with Rio Tinto Limited (ASX:RIO) to deliver operational excellence and place SND well for upcoming long-term maintenance contracts in New South Wales and Victoria.

Besides these, SND has delivered additional SMP works across multiple projects. It aims to Capitalise on major construction prospects and secure further EPC projects with existing clients. In parallel, the Company aims to continue growth in the water sector through successful delivery of Sydney Water contract.

When it comes to exploring new sectors, SND has successfully entered the defence and paper sectors. It is also aiming to expand its core business offering by partnering with the Civil Group. Other key priorities for SND include; evaluation of options to diversify and attain scale, pursue international opportunities with key clients and assess acquisitions to expand maintenance activities and increase scale.

GOOD READ- Saunders International Commenced ECI for the NSW Terminal Expansion, Positioned for Growth Across Sectors

With these objectives set, let us understand the Company’s outlook-

SND’s Positive Outlook- Strong Pipeline of Opportunities Across Markets

In the recent past, SND has secured contract awards of over $70 million, including Sydney Water, Rio Tinto, Defence, and ECI Terminal Expansion. The value of live tenders is ~$344 million, and the pipeline (yet to be tendered) is ~$265 million.

For H2 FY20, the Company is forecasting revenue growth to over $ 70 million. This is likely to be backed by the strong orderbook and pipeline of opportunities, further leading to EBITDA growth into FY21 and beyond. The Company remains confident that the forecast revenue growth coupled with the current fixed overheads will provide sustainable earnings to SND shareholders

The strong multi-year growth outlook along with new projects are expected to contribute to earnings through FY21 and FY22. Moreover, reinstatement of dividends is likely to remain a high priority for the business.

CEO comments

With Saunders’ growing capability and client base in core and emerging sectors, a positive tendering outlook and a well-established client relationship, the Company appears to be on the right trajectory to grow across its operating sectors. SND is well positioned to further grow, as new construction demand rises.

SND inched upward by 5.556% to close the day’s trade at $0.380 on 20 March 2020 and has delivered returns of 44% in the past six months.

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