What is powering Saunders’ (ASX:SND) bullish outlook for 2022 and beyond?

Highlights

• Saunders International is a 70-year-old name in the Aussie services sector, supporting the industrial sectors.
• As of 31 January 2022, Saunders’ order book stood at a record level of AU$223 million.
• Winning a major US defence contract has strategically placed the Company to deliver further works in the ever-growing defence sector.
• The Group continues to tap projects under Government Infrastructure stimulus programs.

Building upon its strong track record of on-time project delivery in a cost-effective manner, Saunders International Limited (ASX:SND) continues to excel in 2022.

The Company is engaged in providing design, fabrication, construction, shutdown, maintenance, and industrial automation services. It serves the oil & gas, infrastructure, defence, water, energy, and mining & minerals sectors across Australia and the Pacific Region.  

Related read: What sets Saunders International (ASX:SND) apart from other contractors?

As of 31 January 2022, the multi-disciplinary engineering and construction group reported work in hand at record levels of AU$223 million. Thus, it would be safe to say that Saunders is in a sweet spot when it comes to cashing in on the exciting market opportunities. Let us explore the factors that position the Company well for growth.

Robust government spending augurs well for Saunders

The spike in crude oil prices underpins government initiatives of building storage tanks for fuels, including diesel. Also, the ongoing troubles in the Pacific region and the Ukraine-Russia crisis in Eastern Europe are amplifying governments’ focus on defence, globally.

Saunders International, with its well-experienced team and innovative solutions, is well-positioned to cash in on the fuel security and defence initiatives. This is reflected with the Company’s AU$165 million defence contract awarded by Crowley Solutions, which in turn, received the contract from the US Defence Logistics Agency, in the first half of FY22.

Read More: Saunders International (ASX:SND) riding high on $165M defence contract   

The contract is for the design and construction of 11 jet fuel storage tanks in the Darwin region for US defence services. The Group will also provide Engineering, Procurement, Construction and Management (EPCM) services for the project.

The delivery of the project will establish the Group as a prominent player with expertise to cater to high-value and high-tech projects in the defence sector. Saunders is strategically placed to deliver further works in the ever-growing defence sector.

Project site for jet fuel tanks (Image source: Company update, 24 February 2022)

Increased spending by the Australian federal and state governments on infrastructure projects, including bridges and roads, continues to drive the Company’s growth. In March 2022, Saunders secured contracts worth AU$17 million in new infrastructure projects.

Related Read: Saunders International (ASX:SND) strengthens NSW foothold, wins $17M in infra projects

The Company’s operating sectors continue to see a rise in new project prospects, which are expected to grow further as a result of major public and private infrastructure investment. From FY21 onwards, the Group's short-term opportunities remain consistent.

The Group continues to focus on Australia's Diesel Storage Program, under which eight projects are to be awarded in the program. For the infrastructure sector, SND continues participation in the NSW Government's "Fixing Country Bridges" initiative. 

Tendering activity reveals a total value of AU$513 million in active tenders, with AU$190 million in preferred contractor status contracts.

Related read: 70 years of trust: Will Saunders continue its success story in 2022?

Industrial Automation via Saunders PlantWeave

The incorporation of PlantWeave, an industrial automation and technology company, as a wholly owned subsidiary of Saunders, is strengthening the Group’s position further.

Saunders can now add more value to its existing projects using Industry 4.0 Technologies and other industrial automation and process controls activities. 

What’s more, the Company’s first-half performance reflected the continuation of a strong and stable operating performance for Saunders. The Company entered the second half of FY22 with a strong platform for growth, which is expected to continue into FY23.

Read Here: Saunders International in sweet spot with record order book and robust H1 financials 

Saunders expects to report robust earnings on the back of its impressive order book and strong growth forecast in the sectors where it operates. The Company expects revenue of AU$115-130 million and EBIT in the range of 6.5-7.5% for FY22.  

SND shares traded at AU$1.180 on 1 April 2022.