On 10th April 2019, Valmec Limited (ASX: VMX), a provider of project engineered equipment, construction and commissioning solutions to the energy and resources sector, announced that the infrastructure and service division of the company had secured new contracts with the long-term repeat clients. The combined value of the contract is around $15 million.
As per the new contract, the company will provide the infrastructure services works for Water Corporation on their Perth Metro Main Renewals Program in Western Australia. It will also consist of the infrastructure construction work for CBH Group at their Wickepin Site Upgrade Project in Western Australia.
The service division of the company has also secured a contract for compression equipment overhaul as well as maintenance services for Lochard Energy in Victoria.
The company expects an immediate commencement of the work on this contract.
With this achievement, the order book of the company remains strong with a number of larger upstream energy and infrastructure projects.
In the month of January 2019, the company secured a $22 million contract for the facility construction works at its Atlas Gas Pipeline Project in South-West Queensland. With this $22 million contract, the order book of the company has boosted and reached $80 million. Other than this project, the company also secured a new contract worth $35 million across Australia in the month of December 2018.
For the half year ended 31 December 2018, the company’s revenue was down by 4.6% to $47.475 million. The company declared a net profit after tax attributable to the owners of Valmec worth $1.343 million, a fall of 17.2% as compared to its previous corresponding period. The fall in the revenue was influenced by a delay in the construction activities across the clients of Valmec. However, the company expects that there would be a significant increase in construction in the second half of FY2019.
The balance sheet of the company reported a reduction in the net asset base as a result of a decrease in the total assets. The total shareholders’ equity was worth $27.383 million as on 31 December 2018.
During the period, there was a substantial cash outflow of $3.810 million through the operating activities as compared to the previous corresponding period. There was also a significant cash outflow of $1.022 million in 1H FY2019 through the investing activities, which was $0.145 million in 1H FY2018. Overall, there was a decline in the net cash and cash equivalents during the period of $4.411 million.
However, the company is hopeful of exceeding FY2018 performance and expects significant growth in the second half of the year. When the company entered the calendar year 2019, its order book was around $80 million along with the pipeline of opportunities related to the construction and services worth over $550 million.
In the previous five years, the stock has generated a return of 2.50%. At market close on 10 April 2019, the stock of VMX was trading at A$0.210, up by 2.439% as compared to its previous closing price. Valmec Limited has a market capitalisation of A$25.77 million with approximately 125.72 million outstanding shares and a PE multiple of 7.24x.
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