Thoughts on Emeco (EHL) and Service Stream (SSM)
Hi James & Team Could I have your view on EHL- Emeco and SSM - Service stream. Do you see any upside to their share price? Are they in sectors you would be in currently? regards Debbie
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Answer
Hi Debbie,
These two stocks feel like “blasts from the past”,
Emeco Holdings (EHL): This business provides heavy earthmoving equipment and related services to the mining industry. Its fallen from grace over recent years, languishing below $1 for the last 3-years, since its ill-fated acquisition in 2020 of underground mining services business Pit N Portal which was intended to diversify revenue beyond surface equipment rental. However, it turned out to be poorly timed and unprofitable, contributing significantly to the share price decline.
- Until further notice we see far better opportunities elsewhere in both the mining and mining services sectors.
Service Stream (SSM): This business provides integrated, end-to-end asset lifecycle services across essential infrastructure networks, including telecommunications, utilities, and transport sectors and had been on a similar journey to EHL before finding a low in 2023, over 80% below its 2019 high, but in this case it’s started to recover nicely.
SSM posted a fresh 4-year high this week as the stock steadily rallies from its 2023 low, the company delivered a robust performance in the first half of FY25 marked by significant improvements across key financial and operational metrics.
- Revenue of $1.27 billion, up 7.9% year-over-year flowing into underlying earnings (Ebitda) of $73.6 million, a 16.4% increase.
With the companies WIH (work in hand) having expanded to $5.9 billion, a 17% increase, with 87% comprising annuity-style operations and maintenance contracts we like the direction the business is heading. In our opinion SSM has been a great turnaround story with further to play out, and we like the stock into dips below $2.
