SRG +4.79%: the mining and asset services contractor announced 1H results today, impressing the market and taking its share price to 10-month highs. Revenue grew 34% to $510m, while earnings (EBITDA) were up 33% to $45m, around 10% ahead of expectations. Impressively, cash conversion swelled to 133%, a significant turnaround from the 68% at the FY23 result and one of the key areas of concern at the last update. Investors were also expecting a drop in margins which didn’t eventuate, contributing to the beat. Work In Hand (WIH) remains strong, up 27% from 1H23, while the company has a pipeline of $6.5b to bid on providing a solid runway for growth. Guidance was upgraded marginally at the midpoint for EBITDA, now expected to be $95-100m for FY24 which could still prove conservative given the strength seen in the first half.
- Today’s result was very positive relative to market expectations. SRG remains cheap alongside better-than-anticipated execution.
MM remains bullish and long SRG in the Emerging Companies Portfolio
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