Logistics giant, Qube Holdings Limited (ASX: QUB) recently announced the acquisition of mining and industrial services company, LCR Group. The acquisition was undertaken through Qube’s subsidiaries at a total consideration of $135 million, financially backed by the company’s existing undrawn debt facilities.
LCR Group is an industrial and mining services company based in Hendra, Australia. It offers services to the mining, oil and gas and renewable energy industries and these services include heavy transportation, mobile crane and outsourced industrial logistics.
(Source: LCR Group’s official website)
Paul Digney, Chief Operating Officer of Qube Holdings, asserts that the acquisition will result in value addition of broad-spectrum mining and industrial services to its existing and future customers. He emphasises on the brand image of LCR from the innovative lifts and shift materials handling solutions across Australia and PNG.
QUB operates under three divisions namely Operating division, Infrastructure & Property and Corporate/other. Reliable integrated logistics solutions, additional geographical diversity and service capability possessed by LCR could further improve Qube’s business and growth trajectory.
Col Partington, CEO & MD of LCR Group, said that the alignment of businesses would drive customer focus domestically, internationally as well as the collective goal of spreading presence. He stated that Qube provides excellent opportunities to be part of the growing national logistics market with strong business units to unlock the value for the customer base.
The initial focus after acquisition will be on continuing the same level of service and delivering new business opportunities along with capitalising on new opportunities as identified. The Management team of both entities remains committed to provide support while achieving key targets. The announcement also states that the acquisition of LCR is not expected to have a material impact on Qube’s Net profit after tax excluding amortisation.
A look over QUB’s Financials:
In November 2018, QUB announced investments in rail infrastructure at Port Botany through Patrick. Patrick is a 50-50 joint venture owned by Qube and Brookfield which operates in terminals business.
For 1HFY19, QUB reported statutory revenue of $837.0 million, up 5% compared to the previous corresponding period. The bottom line showed a significant growth with statutory NPATA up 30.9% to $69.5 million compared to 1HFY18. Diluted EPS changed by 35.7% with 2.8 cents in 1HY 2018 to 3.8 cents in 1HY 2019.
On the back of robust balance and solid growth in earnings, QUB declared a fully franked special dividend of 1.0 cents per share in addition to the interim dividend of 2.8 cents, up 3.7% on pcp, for the six months ended 31 December 2018.
Going forward, QUB maintains an aggressive stance on the acquisitions and investments to unlock unprecedented growth. Both QUB and LCR are based on the business model that focuses on a safety culture and strong commitment to work with native communities.
QUB stock is trading at $2.860 with a price to earnings multiple of 21.260 x as at 15 May 2019 (1:36 PM AEST). Over the past 12 months, the stock has moved up by 19.52% including an upside of 3.99% recorded in the past three months.
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