Saunders International’s upward trajectory to continue well beyond FY22

Saunders International Limited (ASX:SND) has established a strong reputation of delivering innovative and cost-effective industrial solutions. The Company, since its inception, has been playing a pivotal role in the development of the Australian industrial landscape.

This year, the Company celebrated 70 years of successful operations. It is worth mentioning that Saunders has retained some of its clients from its inception.  

At the recently held 2021 annual general meeting, Saunders highlighted its strong entry into FY22 with work-in-hand of AU$83 million. Of the total, nearly 30% of the projects are related to the defence sector. The Company, in a strategic move, has also acquired a new office space and a workshop in the Northern Territory to support its defence projects.

Besides its strong order book, the Company has a live tender pipeline of AU$803 million. This is highest in the last six years of the Company’s operations.

Related read: Saunders International (ASX:SND) set for excellent FY22 with strong order book  

Saunders’ strategic outlook for FY22

Saunders caters to a wide range of industries. The service list includes energy and resources, water, defence, infrastructure, and mining space. These business sectors are expected to increase their capital expenditure over the coming years. As more investments are anticipated in the industries relevant to Saunders, the Company is gearing up to benefit from these opportunities, thus driving a positive outlook.

Image source: Company website

Boosting Australia’s Diesel Storage Program - Saunders continues to assist the short list proponents of the Federal grants for ‘Boosting Australia’s Diesel Storage Program’. The federal grants are valued at AU$260 million, translating into more than AU$600 million of construction work for the FY22-24 period.

Related read: Here’s how Saunders International (ASX:SND) is tapping Australian defence space 

Opportunities amid growing infrastructure focus - To boost public civil infrastructure, the Federal and State governments have introduced several programs, including the AU$500 million NSW Fixing Country Bridges program.

Several infrastructure maintenance projects are also in Saunders’ pipeline.

Soaring commodity prices - Soaring commodity prices will lead to several mining projects being fast-track into construction phase.

The Company has a strong track record in the design, construction, and maintenance of mining-related projects. Besides providing tanks and fuel storage facilities, the Company undertakes a range of civil works for the mining industry.

Diversification of Saunders’ market service offering - The acquisition of PlantWeave Technologies adds more value to the services provided by Saunders.

The transaction drives the Company’s market entry into cyber security, industrial automation systems, process optimisation, Industry 4.0 Technologies, and other technology-based infrastructure opportunities.

FY22 revenue expected at AU$95-105M

Saunders wrapped up FY21 with strong operational performance across the expanded turnover and the range of complex projects undertaken.

Diesel tank for Trafigura Hastings (Image source: Company website)

For the period, total revenue grew by 52% to AU$101 million and NPAT improved by AU$4.3 million to AU$5.5 million. Operating cash flow stood at AU$15.6 million for the reported period. The Company had a year-end balance of cash and cash equivalents of AU$23.8 million.

For FY22, Saunders expects revenue in the range of AU$95 million to AU$105 million. Meanwhile, EBIT is expected to lie in the range of 4.5%-5.5%.

Related read: Saunders International (ASX:SND) closes FY21 with 2.5cps dividend

Established blue-chip client base, strengthened balance sheet, robust contract pipeline, and diversified service offerings present Saunders with solid foundations to further boost its market position across different sectors. The work-in hand of AU$83 million along with tenders in the pipeline will help the Company to build up a strong project portfolio for FY22 and years to come.

Also read: Saunders International (ASX:SND) races past revenue milestone, triples net profit in FY21

SND closed the day’s trade at AU$0.775 with a market cap of AU$81.67 million on 10 November 2021.