By Dan Stratful
Friday 30th September 2011
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Investment Research Group (IRG) rates mining services company Ausdrill (ASX: ASL) as a GROWTH BUY based on its strong growth profile, exposure to the Australian mining sector, and robust financial position. The recent sell-off in the shares sees the stock trading on a FY12 earnings multiple of just 8.8x.
Ausdrill (ASX: ASL) was founded in Kalgoorlie in 1987 and is a diversified mining services company providing services in mining, drill & blast, exploration, procurement & logistics, manufacturing, and telecommunications with operations in Australia, the United Kingdom and Africa. With its head office located in Perth, WA it listed on the ASX in 1994 and today employs over 4,000 staff worldwide. Its growth in recent years saw the company join the S&P ASX 200 in 2010.
ASL reported a record after tax profit of $73 million in the year to 30 June 2011, up 52% on last year. Revenue increased 32% to $835 million and the result was due to the expansion of ASL’s asset base and contributions from Brandrill, a drilling and blasting company it acquired in late 2009. The result was ASL's 7th consecutive year of record profits and the result was driven by new contracts won in Africa and work expansion due to growth in iron ore projects in the Pilbara region of WA. ASL finished the year in good financial shape with a net debt to equity ratio of 13%, cash of $141 million, and interest cover (EBIT/Net Interest) of 8.4 times. ASL's strategy is to continue working primarily for the major mining houses, seek long term contracts, focus on services to the gold mining industry, and participate in the growth of the Pilbara iron ore industry. It expects that the current year ending 30 June 2012, will be one of continued growth, and based on its level of work in hand, it is targeting $1 billion in revenue for the year, resulting in an increase in profit.
ASL shares today traded at $2.75.
For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, email@example.com
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