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Highlights
- Saunders International has delivered strong returns to its investors in the last six months.
- The Company clocked revenue of AU$46.4 million in H1, while EBITDA and NPAT improved.
- Saunders’ AU$165 million defence contract, secured late last year, is the biggest in its history.
- The Company has strengthened its NSW foothold with major infrastructure projects.
- Saunders’ bridge and tank construction disciplines are being driven by the government’s grants and new contracts.
Celebrations may be in order for shareholders of multi-disciplined engineering and construction company Saunders International Limited (ASX:SND), as the Company secured major projects in the last six months.
SND shares have delivered a decent return of over 33% to its shareholders in the last six-month period. Moreover, investors who parked their funds in SND three years ago, have gained more than 300% return on their investment.
Recently, Saunders released its performance report for H1 FY22 ended 31 December 2021. The Company reported revenue of AU$46.4 million and EBIDTA of AU$5.5 million. Net profit after tax stood at around AU$2.8 million, reflecting an increase of 3.28% year-on-year.
As of 31 December 2021, cash on hand stood at AU$30.54 million, an increase of nearly 93% with respect to pcp.
Related read: Saunders International (ASX:SND) in sweet spot with record order book and robust H1 financials
Largest contract in Saunders’ history – A game changer
A major highlight of Saunders’ first half of FY22 was winning a defence contract worth AU$165 million in November last year. The scope of the contract involves the design and construction of 11 jet fuel storage tanks in the Darwin region.
The project has been awarded by Crowley Solutions, which in turn, received the contract from the US Defence Logistics Agency.
The new fuel storage facility will be built to support the Pacific military operations of the US defence forces.
Related read: 70 years of trust: Will Saunders continue its success story in 2022?
Fuel storage tank (Image source: Company website)
New infrastructure projects in NSW
Saunders has secured AU$17 million in new infrastructure projects in the New South Wales region. The projects will contribute to the revenue and earnings of the Company from the third quarter of FY22 to FY23.
Know More: Saunders International (ASX:SND) strengthens NSW foothold, wins $17M in infra projects
What sets Saunders apart from other contractors?
Saunders has been a market leader in the construction of liquid storage tanks. With a strong track record in the delivery of major tank construction projects, the Company has already delivered two storage tanks for the Royal Australian Air Force (RAAF) base in Darwin.
The contract from the US Defence Services will further strengthen the position of SND in the tank construction space. The successful execution of this project will pave the way for SND to win larger projects in future. This in turn could act as a catalyst to drive the Company’s performance further.
Related read: A quick glance at Saunders International’s 2021 projects
How Saunders can benefit from ‘Fixing Country Bridges’ Program
Another discipline where Saunders could leverage the increased spending of state and federal government is civil infrastructure. The NSW government is running the ‘Fixing Country Bridges’ program, which is valued at AU$500 million. The ambitious program is aimed at repairing and fixing the country’s bridges.
Meanwhile, the Company is seeking to tap the immense opportunities offered by the federal government’s Bridge Replacement Program.
These once-in-a-generation government programs aimed at boosting the country’s civil infrastructure are expected to deliver lucrative growth opportunities to companies like Saunders. With its strong track record in the field of bridge construction, the Company could become one of the biggest beneficiaries of the government-run programs.
Related read: Here’s how Saunders International (ASX:SND) is tapping Australian defence space
Bottom Line
The defence contract valued at AU$165 million will push Saunders’ revenue further. Several projects are under construction at this stage with their completion expected in coming quarters, which will further jack up the Company’s revenue.
Moreover, Saunders’ cash balance has improved significantly. With more contract wins in the future and positive cash flow on new contracts, the Company expects to see strong cash generation in the medium term.
