Emeco flags market recovery and best EBIT performance since 2013

Published at Jan 24, 2017, in Features

Provider of equipment rental services to the mining industry, Emeco, has released an encouraging second quarter operational update with group utilisation of 85% an improvement on the previous corresponding quarter’s 75%.

The group also recorded its first half of positive EBIT since the second half of fiscal 2013 in the six months to December 31, 2016.

In an indication that the company is achieving both improved efficiencies, as well as benefiting from a better industry conditions, there was a significant uplift in EBITDA margins in the second quarter of fiscal 2017. These were 38%, double that achieved in the previous corresponding quarter.

Cash at December 31, 2016 was $34 million with $7 million in operating cash flow generated in the second quarter.

Commenting on the turnaround, Managing Director Ian Testrow said, “The operational improvements Emeco has made in the past 18 months with the resultant improvement in EBITDA margins to 42% up from 19% in the prior corresponding period provides a strong future growth platform for the merged Emeco, Orionstone and Andy’s businesses”.

Shares in Emeco doubled from approximately 4 cents per share in in early August to hit a peak of 8.5 cents later that month, but have been volatile since, fluctuating in a range between 5 cents and 8 cents.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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