Continue reading this on our app for a better experience

Open in App
Floating Button
Home Capital Broker's Calls

Maybank, UOB Kay Hian stays positive on Civmec

The Edge Singapore
The Edge Singapore • 2 min read
Maybank, UOB Kay Hian stays positive on Civmec
Photo: Civmec
Font Resizer
Share to Whatsapp
Share to Facebook
Share to LinkedIn
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

Maybank Securities and UOB Kay Hian have maintained their positive views on Civmec following its recent earnings growth reported for FY2023.

For the year to June 30, the Australia-based engineering firm reported earnings of A$57.7 million, up 13.7% y-o-y, driven by all-round growth across its various business segments.

Shareholders are to be rewarded with a full-year dividend of 5 Australia cents per share, up by two thirds over the preceding FY2022 ended June 2022.

In his Aug 20 note, Maybank analyst Eric Ong, who has maintained his "buy" call, raised his target price to $1.05 from $1, which is pegged to 10x current FY2024 earnings, up from a valuation multiple of 9x previously.

Ong notes that Civmec was able to defend its margins as the company managed to eke out better efficiency.

However, Ong observes that the company will be more targeted in securing new wins, despite bouyant tendering activity across the various segments.

See also: Maybank upgrades Singapore banks to ‘positive’ as it sees the sector benefiting from China and growth in Asean

"We think Civmec is well-placed to capitalise on the government’s defence spending in the mid-long term," says Ong, adding that the company has built up an order book worth some A$1.15 billion as at June 30, up 10.6% y-o-y.

Ong notes that Civmec has been able to reduce its bank borrowings and has even turned into a net cash position with a balance of A$13.9 million, which should enable it to sustain its dividend payout ratio, thus providing a prospective yield of 5-6%.

Cheong believes that Civmec is well-positioned to win more major projects even as it becomes more selective.

See also: RHB raises target price for Centurion to $1.06 on back of better worker bed rates and growth from overseas properties

In his note on Aug 30, UOB Kay Hian's John Cheong maintained his "buy" call and $1.23 tarte price, which is pegged to 11x FY2024 earnings estimate, versus just 8x currently.

Cheong notes that Civmec's Australia-listed peers are trading at an average of 15 x FY2024.

×
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
© 2024 The Edge Publishing Pte Ltd. All rights reserved.