Legend delivers impressive results

By Trevor Hoey. Published at Aug 13, 2018, in Features

Name: Legend Corporation Ltd (ASX:LGD)

Market Capitalisation: $52 million

Opening Share Price: 28 cents

Legend Corporation (ASX:LGD) has delivered a strong performance for fiscal 2018 with its net profit of $6.0 million representing year-on-year growth of 60%.

Legend is a diversified engineering solutions provider that operates across disciplines such as electrical, IT and semiconductors, servicing the power, rail, mining, medical and defence sectors.

While all divisions performed well during the year, it was the infrastructure business that was the outstanding performer.

This segment benefited from increased demand for its products driven by the continued nationwide spending on infrastructure and commercial projects and the resumption of capital works by power utilities.

Revenue and gross profit from this segment, before the addition of the acquired Celemetrix Group (CLX) in March 2018, were up by 8% compared with fiscal 2017.

Group revenues increased 15% on the year to $114.9 million (FY17: $100.2 million) with $8.7 million of this increase attributable to CLX.

The impact of CLX only applied for the period March 2018 to June 2018, indicating that a full year contribution in the 2019 financial year should provide substantial growth.

With a net profit equating to earnings per share of 2.8 cents, LGD is trading on a PE multiple of 10 — relative to Monday morning’s opening price.

The average PE multiple for the sector is approximately 16 with many companies trading on or around those multiples not delivering the outstanding growth that LGD has achieved.

Should the company be able to replicate this result, or even improve on it in 2019, LGD could gain support as it has tended to fly under the radar in the past.

Although it does remain a speculative stock so investors should still take a cautious approach to any investment decision made with regard to this stock.

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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The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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