GCS - Global Construction Grp

[mark100]

GCS reported a respectable set of numbers with a bullish FY11 forecast.

FY10 NPAT $11.4m EPS 13.1c PE 6.9x. Net Debt is $35m (Net Debt/Assets of 22%) but operating cash flow was very good at $27m.

They have forecast better than 25% NPAT growth for FY11 with would give EPS of around 16c and a PE of 5.6x. That would put ROE at around 18%

GCS is leveraged to WA based construction. www.gcs-group.com.au

[mark100]

GCS is at its 52 week high. Would be good to see it push past. Still very good value based on their FY11 forecast. Goes ex div later this week

[mark100]

Today's profit upgrade has seen GCS breakout of its recent trading range. Profit guidance has been increased by 20% so they now expect 50% NPAT growth in FY11.

EPS of 18.5c is now forecast. Even after today's share price jump the forecast PE is 6.4x. Return on Equity will be over 20%

The annoucement also sounds bullish for future years

[mark100]

GCS has been strong leading up to it results. Not too many companies left on the market leveraged to the WA economy, trading at 7.5x (previously upgraded) earnings, with ROE over 20%

[corky]

Has been strong lately. I was surprised how muted the reaction was to the Nov upgrade though - not sure what's triggered the catch up but not complaining.

[mark100]

GCS seem to be tracking a bit ahead of their full year forecast. Another upgrade wouldn't surprise me. Despite its strong run it's still only trading at around 9x FY11 forecast NPAT

[mark100]

Not a very popular thread this. GCS has done another profit upgrade, announced a Labour Hire acqusition (apparently accretive for FY12) and done a capital raising at a small premium to the share price.

FY11 EPS look like being over 20c per share. PE is still under 10x and it looks like we will see more growth for FY12

[corky]

I'm sure not being a popular thread doesn't affect your sentiment Mark. Capital raising at a premium - not too common. Looked another good ann. but sold off after initial rise. Happy to hold and may top up around 1.80.

[mark100]

Hi corky, I just spoke to David Kiggins at GCS. He is the CFO. I wanted to know if there would be high Ammortisation and Interest charges against the $8.2m EBITDA GIS is earning. He said there wouldn't be as most of the goodwill acquired would be of the type that didn't need writing off. He also said GIS had minimal debt, so the interest charge is not material. So of the $8.2m EBITDA, most will fall through to the NPBT line.

[corky]

Even better Mark - thanks for taking the trouble to post the update.