Australia | Jun 21 2006
By Greg Peel
Front-end solutions, engineering and process, project and construction management and operations and maintenance are all areas offered by the two divisions of Ausenco (AAX), under its two labels of Ausenco and Ascentis.
ABN Amro reports Ausenco is recognised internationally and has won awards for its solutions within the global mining and mineral processing industry. It provides alternate leverage to the global resources sector, the analysts note.
Ausenco’s business is closely linked to the demand for minerals, and ABN expects base metal consumption growth to remain strong.
This is not a new company – Ausenco has a longstanding reputation for innovation and excellence. It has a list of satisfied customers around the world from which it can leverage further diversification of client base.
ABN reports Ausenco has a pipeline of 39 projects valued between $20m and $400m. Robust room for further growth is expected. Over 2003-05, EBIT grew from $1.3m to $7.5m, a compound growth rate of 124%. Revenue is forecast to grow a further 24% in 2006, with ABN analysis suggesting more subdued rates thereafter of 10% in 2007 and 5% in 2008. Normalised net profit forecasts are for $7.45m in 2006, $9.36m in 2007 and $10.00m in 2008. ABN is not anticipating any major acquisitions at this stage.
ABN has used discounted cash flow to value Ausenco at $1.64, which it has set as its target price. The analysts rate the company a Buy. The stock closed yesterday at $1.47.
ABN is the first broker in the FN Arena database to cover Ausenco.