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  1. #1
    percy
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    Default ACF.Acrow Formwork and Construction Services LTd

    They provide formwork and scaffold equipment [including rental] to the construction industry.
    Current market cap at 33 cents per share is $72.10 mil.
    They are profitable and paying a divie.
    Outlook is for an increase in EBITDA of between 13.33% and 16.6%.
    Strong balance sheet with only $14.6 mil debt meanns gearing ratio of just 20%.
    https://stocknessmonster.com/announc....asx-6A992758/
    Last edited by percy; 01-09-2020 at 09:26 AM.

  2. #2
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    Default

    Also in New Zealand. Subsidiary or separate entity?

  3. #3
    percy
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    Quote Originally Posted by artemis View Post
    Also in New Zealand. Subsidiary or separate entity?
    Looks to be an unrelated separate entity.

  4. #4
    Senior Member
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    Started receiving dividends from Acrow a couple of years ago which I first thought was spam... Turns out they arose out of the shell of a disaster I had successfully forgotten... Noble Mines Group (NMG).

    Had a look at their business business earlier in the year, decided it was interesting and likely to benefit from increased government infrastructure spending in Aus/NZ by post COVID. Was going to buy some more under 20 cents but got distracted...

    The registrar they use is pretty cool, now reinvesting my few cents
    Last edited by Jaa; 08-09-2020 at 08:55 PM.

  5. #5
    percy
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    "Late Put Through,Crossed" 2,232,236 shares at 33 cents.Total amount $736,637.

  6. #6
    percy
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    This article appeared in Small Caps weekly wrap.

    Acrow Formwork and Construction Services (ASX: ACF)
    What’s not so boring for investors is the ability of Acrow Formwork and Construction Services to thrive in the troubled times.

    This is partly the result of a timely switch from the residential sector to engineered formwork for mega infrastructure projects.

    Acrow reported a 22% net sales surge to $87 million for the full year, with EBITDA climbing 30% to $15 million.

    Notably, June half EBITDA doubled to $9.5 million, while revenue surged 39% to $49 million.

    This is because client projects such as the Sydney and Melbourne metro projects, Snowy Hydro 2 and Brisbane’s Queen’s Wharf forged ahead with minimal disruption.

    With a record pipeline of new jobs, management is “comfortable” with broker forecasts of ebitda of $17-17.5 million for the current year.

    The munificent board upped final dividend to $0.0105 a share from $0.01 previously, taking the full year payout to $0.0175 (a yield of around 5%).
    Last edited by percy; 12-09-2020 at 12:13 PM.

  7. #7
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    Revenue and EBITDA were boosted by the acquisition of Uni-span effective 31 October 2019, so most of this growth (particularly in the second half) due to acquisitions rather than organic growth.

    EPS (excluding significant acquisition costs) in 2020 were a healthy 4.62 cps, however they were only up 6% of FY19. Share price is an attractive PE multiple of these underlying earnings amount.

    However, i’m concerned by Note 23 of the FY20 financial statements which details the consideration payable for the acquisition of Uni-span. The note states “a contingent payment of up to $4,250,000 cash, provided the Acrow groups EBITDA exceeds $18,000,000 for the FY21 Financial Year. At reporting date the contingent payment is estimated to be nil”.

    Underlying EBITDA for FY20 was just north of $15m, which included 8 months of Uni-span. Second half EBITDA was $9.5m. So the directors are saying they don’t expect much EBITDA improvement in FY21 (adjusted for a full year of Uni-span) however if they do manage to improve profitability a bit, it’s going to cost shareholders $4.25m in cash. Therefore if EBITDA improves a bit, shareholders could loose much more than the EBITDA improvement. Worse still, the $4.25m will need to be funded out of net profit after tax so shareholders could be much worse off. Who negotiates deals like this?
    Last edited by Southern Lad; 12-09-2020 at 12:58 PM.

  8. #8
    percy
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    No incentive to beat brokers' forecast.So the $17 to $17.5mil EBITDA looks likely.

  9. #9
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    Quote Originally Posted by percy View Post
    No incentive to beat brokers' forecast.So the $17 to $17.5mil EBITDA looks likely.
    Unless management bonuses are based on EBITDA!

  10. #10
    percy
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    Quote Originally Posted by Southern Lad View Post
    Unless management bonuses are based on EBITDA!
    LOL.Yes that could be fun.

  11. #11
    percy
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    A bit old but adds a bit of colour about them.Recorded December 2019.
    https://www.acrow.com.au/about-us/

  12. #12
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    Does a listing from Private Equity vendors, who have failed to find a trade buyer raise any red flags for you Percy?

    Interesting talk in the links you posted of the change in focus from residential to infrastructure coinciding with sale by PE. Also, ACF have chased acquisitions post PE ownership, which you would normally expect to see during the PE ownership transformational period.

    Given that CEO Steven Boland was in place during the PE ownership, does this suggest he had a disagreement with his PE masters on how to take the business forward and extract maximum value for shareholders?
    Last edited by Southern Lad; 12-09-2020 at 10:43 PM.

  13. #13
    percy
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    Private Equity .50/50 for me.Lost some money on Tegal.Made big money with Scales.Avoided Dick Smith.So judge each on their own.
    I do not have any answers for your other questions.
    The decision to withdraw from residential,and expand via acquisition civil is timely,with the very strong tail winds civil will enjoy over the next few years.I like businesses that sell off their low margin divisions,and recycle the funds into better margin sectors.Better capital use/allocation,and saves management wasting time on low margin business.A better focused business.In this case dropping 70% of their business to concentrate the other 30 %was very bold,and is proving to be right.
    Last edited by percy; 13-09-2020 at 08:17 AM.

  14. #14
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    For me ACF needs to get some more runs on the board, but overall environment looks positive with Government sponsored infrastructure spend in Australia providing plenty of opportunity.

    if they get it right, there should be good upside available on current (cum dividend) share price.

    Personally I’m always happier to back an under the radar we’ll performing business with a good track record than back a business that the previous owners have moved on because they can’t see avenues to add value. Having said that, there are cases where listing a former PE owned business provides easier access to capital, coupled with the right management team, where there is still upside left. Hopefully ACF in this category, time will tell.

    On the FY21 EBITDA, if H2 FY20 was $9.5m, then at the current run rate you would expect FY21 EBITDA of $19m. Curious that directors are comfortable with average broker forecasts of $17m to $17.5m, also the note 23 comment that they don’t expect that the $4.25m contingent consideration for the purchase of Uni-span to be payable because EBITDA won’t reach $18m. So no great strides forward for ACF in FY21?

  15. #15
    percy
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    I think your post sums up very much my thoughts on ACF.
    Hopefully the right company, in the right sector, at the right time.
    Last edited by percy; 13-09-2020 at 09:24 AM.

  16. #16
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    Just a NZ scaff anecdote. Last week I told the scaff company (not Acrow but a decent size Wellington company) our job was finished but they can leave the scaff up for a bit if they wanted to. We give them the opportunity to leave if it's not in the way, saves them double handling. Last week, removed first thing the following morning. Unusual, but a construction indication like counting cranes!

  17. #17
    percy
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    https://stocknessmonster.com/announc....asx-6A997481/
    The annual report was very positive,with a strong outlook, and I think that is the reason we have seen the share price rise on good volume.
    Today 916,719n shares have traded and the last price traded was 37 cents CD,.

  18. #18
    percy
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    Last edited by percy; 28-10-2020 at 05:48 PM.

  19. #19
    Update Ready To Install
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    Im seeing scaffolding all over the place including Acrow (nz). Folks renovating alot. Also spoke to a supplier of Double glazed windows. he was coming every day or so with one or two windows for renovations nearby, says hes booked solid into february.

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