GR Engineering Services Ltd (GNG)
Hi Team, Thank you for your insights. I have held GNG for yield for some years. I would appreciate your thoughts on this stock . Also your thoughts on top two income stocks apart from banks. Regards Kay
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Answer
Hi Kay,
GNG is a $550mn engineering consulting and contracting company providing engineering design and construction services to the mining and mineral processing industries. We’ve looked at GNG a few times in the past but haven’t covered it on the site. We find these sorts of businesses that rely on a lot of people to win and deliver complex work a bit of a challenge, though they have had some nice tailwinds in recent years, and these guys run a great operation, with a good stash of cash to serve as a buffer when times are more challenging – very important for this type of business.
The stock actually looks great, it’s performing where it matters financially, for the first half of FY25:
- Revenue of $272.1mn was up 45% YoY and EBITDA of $34.5mn was up 52.7% YoY.
- The company has $111.8mn in cash and no debt which is significant considering the stocks market cap.
- The stocks forecast to yield 6% Fully Franked over the next 12-months, and trades on ~13x.
Importantly with regard to the second part of your question we can only give General Advice at MM, but our preferred two stocks for yield, excluding the banks, in the MM Active Income Portfolio at current levels are probably Super Retail Group (SUL) and Magellan (MFG), with the latter a more volatile play, with Smart Group (SIQ) thrown in the mix as well. That said, we much prefer a portfolio approach, having diversity accross sectors, earnings streams, and asset classes, to create a nice blended income return.
