Today, on 7th May 2019, Saferoads Holdings Limited (ASX: SRH) announced that it has secured first order of its new HV2TM temporary barrier system to a major equipment hire company in New Zealand, for delivery in July. Company CEO, Mr Darren Hotchkin stated that this initial sale of a new product is a critical milestone for the group in introducing the first free-standing TL-4 MASH tested temporary barrier system in the world. Mr Hotchkin further added that this is a start of the commercialisation stage of this new product, which is progressing well with regulatory approvals in five US states and, more recently, in the province of Ontario, Canada. The group is anticipating further Australian approvals towards the end of the calendar year.
In a previous announcement, the company published its market update, where it pointed that the group’s overall sales performance for the half year remains flat, and therefore, the total revenue for FY19 will likely remain in line with FY18. SRH’s international sales and equipment rental services showed promising growth, but the domestic sales witnessed a tougher competition with the reduced sales volumes in comparison to the previous financial year. The group’s equipment rental business has performed well, and for continued growth, the company is expected to manage its debt/equity position in a judicious way. SRH is focusing on various new business development initiatives, particularly in establishing commercialisation of the new products in the US and NZ markets. The group is on track in establishing partnerships with the potential industry players, by moving closer to formal sales and marketing agreements for the HV2TM Barrier and the Omni-StopTM Bollard range. It is expected that profit for FY19 will be lower than the FY18 pre-tax profit of $712K, to be in the range of $150K to $400K.
In its H1 FY19 results, the group reported an increase in its revenue by 28% pcp to $10.3 million. Its profit after tax increased by 92% pcp to $288,042. SRH’s EBITDA increased by 54% pcp to $668,288, majorly due to improved volumes and margins of its existing product lines, along with the contribution from another major overseas order for its IronmanTM temporary barriers in the USA. Apart from the sales growth in the rental business and IronmanTM Hybrid barriers, the group’s solar public lighting offering witnessed revenue growth of 144% when compared apples-to-apples, due to flexible lighting solutions provided to its customers. There were additional sales in its flexible signage products into Belgium along with the orders for its traffic calming products into New Zealand and Malaysia. Its proprietary variable messaging sign (VMS) trailers grew by 76% as compared to the previous corresponding period.
On the stock information front, at the time of writing (on AEST 02:53 PM, 7 May 2019), the stock of Saferoads Holdings was trading at $0.220, with a market capitalisation of ~$8.37 million. Its current PE multiple stands at 9.36x and its last EPS was noted at $0.024. Its 52 weeks high price stands at $0.400, with an average volume of 33,326. Its absolute returns for the one year, six months and three months are 18.92%, -42.11%, and -38.03%, respectively.
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