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Australian Engineering, Contractors & Service Providers

Australia Week Ending Date Published Edition
24 April 2020 27 April 2020 355

Market Performance – Edition 355 – Oil Price Dominates News Flows

P erc en t age c han ge Chan ge in bas i s poi n t
In dex Fi xed in c om e Yield
Week YT D 12-m on t hs Week YT D 12-m on t hs
(Australia) S&P / ASX200 (4.5%) (7.2%) (17.9%) (Australia) 2-year gov bonds 0.23% 0.00 (1.68) (1.10)
(Japan) Topix (1.5%) (4.9%) (12.3%) (Australia) 5-year gov bonds 0.45% 0.01 (1.47) (0.94)
(Singapore) FTSE Strait Times Index (3.7%) (17.9%) (24.8%) (Australia) 10-year gov bonds 0.90% 0.02 (1.42) (0.90)
(Hong Kong) Hang Seng (2.3%) (7.8%) (19.4%)
(South Korea) Kospi 200 (1.9%) (4.5%) (11.5%) R a te We e k Y TD 12- mo nths
(US) S&P 500 (1.3%) 13.2% (3.1%) AUD to USD 0.6385 0.3% (9.5%) (9.0%)
(US) Dow Jones Industrial (1.9%) 1.9% (10.2%)
(UK) FTSE 100 (0.6%) (14.5%) (22.6%)

A negative week for most Australian Sector constituents. Oil trade dominated the early part of the week with for the first time in
history US futures contracts trading in negative territory – as Sellers ran out of storage capacity to hold excess production. Despite
some stabilisation questions remain over near term oil consumption with airline fleets grounded and vehicle traffic reduced. CNBC
anticipates global auto sales down 22% in 2020 due to COVID 19 – which echoes BHP discussion on anticipated activity in global
steel mills (see link below).

ASX200 INDEX
M&A Rumour, Industry News and Private Activity
BHP operational review released 21 April noted “Production guidance for 2020
financial year remains unchanged for petroleum, iron ore and metallurgical
coal……Energy coal production is under review”. Link here – its interesting to read:
https://www.asx.com.au/asxpdf/20200421/pdf/44h3jd8d76mcvh.pdf
We believe the USA Energy Industry will be an important one to watch in the coming
weeks as bankruptcy questions hang over many producers with high debt – in
particular in the Shale Producers many which operate on thin margins
In Australia this week:
ACCC notes that Ventia’s proposed acquisition of Broadspectrum is not opposed.
Ventia is a 50/50 partnership between CIMIC Group and Funds management
company Apollo Global Management
DAILY PERFORMANCE OF ASX200 The ACCC also noted : “We are conscious of the impact of the COVID 19 Pandemic
on many businesses and transactions, and where possible, we will expedite reviews
as we have done in this review”.
Downer entered a new $500m revolving credit facility with a scheduled maturity of
July 2022. DOW noted now no debt facility matures in 2020 or 1st half of 2021.
Saunders International announced a $20m (approx.) contract win for D & C at Port
Botany for 3 new 35 megalitre tanks.
Aerometrex enters agreement to acquire Australian aerial imagery company
Spookfish for $1.5m on a structured deal over 12 months. Still subject to DD.
Boart Longyear provided a Q1 2020 update with Adjusted EBITDA down 61%
Incitec Pivot announces cancels strategic review commenced September 2019 for
Incitec Pivot Fertilisers – will retain the business operations

LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Sources: Thomson Reuters Eikon, LCC Research Page 1

WINNER:
BOUTIQUE
INVESTMENT
BANKING FIRM
OF THE YEAR
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News Headlines and Key Sector Developments

Ticker News/ Event Ticker News/ Event

CIM Ventia acquisition not opposed by ACCC ANG Provides Business Update on impact COVID 19

DOW Downer completes $500m financing BLY Q1 2020 results. Adjusted EBITDA down 61%
Provides COVID 19 Update – notes “turning off non Cancels Strategic Review commenced September for
SND IPL
essential capital sepnd & discretionary spend” Fertilisers Business
Awarded $20m design & construct contract for 3
SND MIN Releases quarterly activities report
tanks at Port Botany

SRG Shares released from Escrow MSV Nathan Mitchell (Director) acquires 225,000 shares

Announces issue of (subject shareholder

approval) 17.1 million Loan Funded Shares to Dr Maintains market guidance at lower end – Revenue $295 -
TPP MYE
Paul Dalgleish and 3.0 million shares to Mr William $315m and EBITDA $27m to $31m
Howard
Perrenial Value Management reduces
BLY AEI Appoints new director
shareholding from 12.09% to 10.44%

AMX To acquire Spookfish Australia for $1.5m TPS First Samuel reduces shares from 31.59% to 30.39%

Offshore & Oilfield Oil & Gas Services News – Australia & Abroad

• BHP notes that “no exploration and appraisal wells were drilled during the March 2020 quarter in their
operational update : https://www.asx.com.au/asxpdf/20200421/pdf/44h3jd8d76mcvh.pdf
• The offshore environment not immune from COVID 19 impact with Tap Oil & Mubadala Petroleum implementing
protocols to reduce risk of the Virus spreading amongst personnel involved in activities offshore Thailand
• Maersk Drilling reported as starting talks on North Sea layoffs and stacking rigs as drilling activity impacted by
current oil price environment
• UK subsea well decommissioning specialist Well Safe Solutions awarded a 3 year contract to Fugro to supply ROV
services, rig positioning and remote operations.

LCC’s Sector Association Involvement

We are driven to improve our technical knowledge of the Resource
Services, Oilfield Services, Electrical Services, Infrastructure Services,
Engineering and Resources Sectors, and seek to be an active member
within key industry peak bodies.

Not only does this strategy reinforce our fundamental enjoyment and
drive to better service clients within these Sectors, but it allows us to
continually build deep operational and business knowledge of both
broad and niche industries.

This differentiates LCC from other Advisory Firms as we deliver much

more to the Client Leadership Team and Board of Directors than
“commoditised” transactional experience and “general advice”
Sources: Thomson Reuters Eikon, Company Announcements, LCC research
LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Page 2

WINNER:
BOUTIQUE
INVESTMENT
BANKING FIRM
OF THE YEAR
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LCC Australian Contractors & Service Providers Index®

(LCCACSPI)
Market Data Since 2011 Rolling 1 Year Market Data

The LCCACSPI Index shows the damage done in Volatility over the last 2 trading months now
this rout vs the ASX 200 over the long term becoming apparent

Market Data Since 2011 Rolling 1 Year Market Data

All sectors tracking negative – and will likely Sharp recovery from March lows now in question of
continue to do so as Macros commodity themes being a false dawn – will March be retested ?
now dominate discussion

LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Sources: Thomson Reuters Eikon, LCC Research Page 3

WINNER:
BOUTIQUE
INVESTMENT
BANKING FIRM
OF THE YEAR
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ASX-Listed Companies – as at close Friday 24 April 2020

Ma r k e t Ca p O pe n Pr i ce Cl o se Pr i ce We e k Hi gh We e k Lo w We e k l y V o l ume EV / EV/
Ti ck e r Co mpa ny Na me (A$ m) (A $) (A$) (A$) (A$) ch a nge (%) Tr e nd EB I TDA EB I T
Engi ne e r i ng Se r vi ce s
ACF.AX Acrow Formwork and Construction Services 52 0.24 0.24 0.26 0.24 ▼ (5.9%) 8.3x 19.8x
AJL.AX AJ Lucas Group Ltd 67 0.06 0.06 0.06 0.05 ▼ (6.7%) 8.1x 12.9x
BOL.AX Boom Logistics Ltd 37 0.09 0.09 0.09 0.09 ▼ (9.5%) 4.7x n.m.
BPP.AX Babylon Pump & Power Ltd 13 0.01 0.02 0.02 0.01 ▲ 7.1% 11.3x n.m.
BSA.AX BSA Ltd 134 0.31 0.31 0.31 0.28 — 0.0% 3.7x 4.8x
CDD.AX Cardno Ltd 107 0.29 0.24 0.25 0.22 ▼ (4.0%) 4.2x 9.4x
CIM.AX CIMIC Group Ltd 7,070 23.50 21.84 23.07 21.01 ▼ (8.2%) 3.6x 6.3x
CVL.AX Civmec Ltd 201 0.38 0.40 0.40 0.38 — 0.0% 11.6x 18.4x
DCG.AX Decmil Group Ltd 32 0.14 0.14 0.13 0.12 — 0.0% n.m. n.m.
DOW.AX Downer EDI Ltd 2,094 3.85 3.53 3.72 3.35 ▼ (7.1%) 5.6x 12.0x
EGN.AX Engenco Ltd 131 0.39 0.42 0.42 0.39 — 0.0% 10.2x 16.8x
FWD.AX Fleetwood Corp Ltd 135 1.50 1.43 1.50 1.38 ▼ (4.3%) 3.5x 7.6x
GNG.AX GR Engineering Services Ltd 107 0.71 0.70 0.71 0.70 ▼ (0.7%) n.m. n.m.
JLG.AX Johns Lyng Group Ltd 530 2.50 2.39 2.43 2.25 ▼ (2.8%) 17.3x 20.9x
LCM.AX LogiCamms Ltd 28 0.14 0.14 0.14 0.14 ▲ 3.7% 5.1x 6.9x
LLC.AX LendLease Group 5,797 11.82 10.29 11.16 10.20 ▼ (13.9%) 11.1x 13.3x
LYL.AX Lycopodium Ltd 155 4.20 3.91 4.18 3.80 ▼ (6.9%) 1.4x 1.6x
MCE.AX Matrix Composites & Engineering Ltd 20 0.21 0.20 0.21 0.19 ▼ (11.4%) 14.6x n.m.
MND.AX Monadelphous Group Ltd 939 11.44 9.96 11.13 9.58 ▼ (13.2%) 8.8x 11.8x
PGX.AX Primero Group Ltd 31 0.20 0.18 0.20 0.17 — 0.0% 3.9x 4.7x
RDG.AX Resource Development Group Ltd 15 0.03 0.02 0.03 0.02 ▼ (7.7%) 3.5x n.m.
SND.AX Saunders International Ltd 45 0.42 0.44 0.46 0.41 ▲ 4.8% n.m. n.m.
SRG.AX SRG Global Ltd 122 0.27 0.28 0.28 0.25 — 0.0% 8.3x n.m.
SSM.AX Service Stream Ltd 757 1.95 1.86 1.92 1.82 ▼ (4.1%) 7.1x 9.5x
SXE.AX Southern Cross Electrical Engineering Ltd 101 0.43 0.41 0.40 0.39 ▼ (4.7%) 2.2x 2.7x
SOP.AX SML Corporation Ltd 6 0.03 0.03 0.03 0.03 — 0.0% n.m. n.m.
TPP.AX Tempo Australia Ltd 11 0.03 0.03 0.03 0.03 ▲ 3.3% n.m. n.m.
VMG.AX VDM Group Ltd 10 0.00 0.00 0.00 0.00 ▼ (25.0%) n.m. n.m.
VMX.AX Valmec Ltd 20 0.17 0.16 0.17 0.15 ▼ (5.9%) 2.5x 3.4x
VRS.AX Veris Ltd 7 0.02 0.02 0.02 0.02 ▼ (20.8%) 8.0x n.m.
WOR.AX WorleyParsons Ltd 3,582 7.33 6.90 6.86 6.38 ▼ (6.0%) 8.2x 10.5x
ZGL.AX Zicom Group Ltd 13 0.06 0.06 0.06 0.06 — 0.0% n.m. n.m.
Mi ni ng Se r vi ce s
AMX.AX Aerometrex Ltd 138 1.40 1.47 1.30 1.21 ▲ 4.6% 29.1x 49.1x
ALQ.AX ALS Ltd 2,940 6.39 6.11 6.29 5.75 ▼ (5.9%) 10.5x 13.4x
ANG.AX Austin Engineering Ltd 72 0.14 0.13 0.15 0.13 ▲ 4.2% 6.7x 19.2x
BLY.AX Boart Longyear Ltd 56 0.62 0.64 0.67 0.62 ▼ (5.9%) 10.5x 21.9x
EHL.AX Emeco Holdings Ltd 408 1.11 1.11 1.07 0.94 ▲ 0.5% 4.0x 7.6x
IMD.AX Imdex Ltd 327 0.96 0.85 0.96 0.80 ▼ (10.6%) 5.8x 8.6x
IPL.AX Incitec Pivot Ltd 3,348 2.14 2.08 2.09 2.03 ▼ (4.6%) 10.4x 24.5x
MAH.AX Macmahon Holdings Ltd 430 0.22 0.20 0.21 0.20 ▼ (9.1%) 2.8x 7.6x
MIN.AX Mineral Resources Ltd 2,985 16.65 15.84 16.40 15.66 ▼ (6.4%) 4.5x 5.9x
MLD.AX MACA Ltd 191 0.81 0.72 0.77 0.70 ▼ (12.3%) 4.1x 39.8x
MSV.AX Mitchell Services Ltd 74 0.46 0.37 0.41 0.36 ▼ (20.4%) 5.1x 10.6x
MYE.AX Mastermyne Group Ltd 70 0.69 0.69 0.70 0.68 — 0.0% 3.4x 5.7x
NWH.AX NRW Holdings Ltd 681 1.92 1.60 1.79 1.46 ▼ (14.4%) 5.4x 10.5x
ORI.AX Orica Ltd 6,749 16.98 16.68 16.73 16.11 ▼ (3.0%) 9.9x 14.8x
PPK.AX PPK Group Ltd 253 3.30 2.97 3.30 2.91 ▼ (8.6%) 109.1x 341.5x
PRN.AX Perenti Global Ltd 526 0.85 0.77 0.79 0.67 ▼ (8.4%) 2.8x 7.4x
RUL.AX RPMGlobal Holdings Ltd 209 1.00 0.94 0.96 0.89 ▼ (4.6%) 20.5x 46.9x
SWK.AX Swick Mining Services Ltd 38 0.14 0.13 0.13 0.13 ▼ (3.8%) 2.9x n.m.
F a ci l i ti e s Manage me nt & Se r vi ce s
AEI.AX Aeris Environmental Ltd 138 0.59 0.57 0.57 0.50 ▼ (1.3%) n.m. n.m.
ALQ.AX ALS Ltd 2,940 6.39 6.11 6.29 5.75 ▼ (5.9%) 10.5x 13.4x
HIL.AX Hills Ltd 43 0.22 0.19 0.21 0.19 ▼ (14.0%) 7.6x 31.4x
MIL.AX Millennium Services Group Ltd 13 0.28 0.28 0.29 0.28 — 0.0% 10.8x n.m.
ENE.AX Enevis Ltd 3 0.05 0.04 0.05 0.04 ▼ (18.9%) n.m. n.m.
TPS.AX Threat Protect Australia Ltd 13 0.06 0.05 0.06 0.05 ▼ (5.3%) 12.0x n.m.

LCC Asia Pacific Insights | Australian Engineering, Contractors & Services Report Sources: Thomson Reuters Eikon, LCC Research Page 4

WINNER:
BOUTIQUE
INVESTMENT
BANKING FIRM
OF THE YEAR
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About LCC Asia Pacific – we deliver Deal Craft™

Founded in 2004, LCC Asia Pacific is an award-winning boutique investment banking & strategic advisory
firm that specializes in the engineering & contracting sector as well as general & specialised services –
including mining, drilling, energy & oilfield (onshore & offshore)

We provide our clients with key insights on the Engineering, Contracting and Oil Field Services Sectors –
assisting with in depth strategy formulation and execution of both organic and M & A engagements

Investment Banking Services Strategic Advisory Consulting

 Mergers, Acquisitions & Divestments  Complex Negotiation Planning & Execution Including
 Equity Capital & Debt Capital Advisory For Commercial Contracts & Dispute Resolution
 Balance Sheet Review & Optimisation  Financial Modelling, Scenario Analysis & Business
 Project & Infrastructure Financing Case Development
 Yellow Metal Financing  Analysis Of Commercial Arrangements Including
 Strategic Corporate Investment Planning & Tolling, “Services For Equity” & Royalty Agreements
Implementation  Tender Research & Preparation Support
 Consortia Development & Deal Structuring  Bespoke Industry Specific Research & Data
 Joint Venture Design, Partner Selection & Analysis, including “Benchmarking”
Commercial Structuring  Domestic & Cross Border Market Entry & Exit
 Shareholder Disputes & Activism Planning & Analysis
 Mining Technology Research, Recommendations &
 Independent and experienced advice to Implementation
Leadership teams and Boards of Directors –  China Belt & Road Initiative Strategies & Responses
including through crisis management

Nicholas Assef
Engineering, Contracting & Services Sector Lead
+ 61 498 115 054
[email protected]

lccasiapacific.com.au SYDNEY | BRISBANE | NEW YORK

LCC Asia Pacific is a boutique investment banking practice, providing independent
corporate finance & strategy advice to clients in Australia and across Asia Pacific
markets. We have acted for ambitious clients ranging from “emerging” companies,
up to Fortune 100 & “Mega” Asian listed entities.
LCC Asia Pacific provides clear, unbiased counsel to CEOs and Boards of Directors
considering growth strategies, business transformation and challenging corporate
decisions. We understand that to service such clients requires a high performance
approach, and a tenacity to deliver results.
For more information, visit www.lccasiapacific.com.au.
© 2019 LCC Asia Pacific

Disclaimer
This general information has been prepared by LCC Asia Pacific Pty. Limited ("LCC"). The research is based on public information
obtained from sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or
suitability of any such information and makes no warranty, guarantee or representation, expressly or impliedly about this research.
LCC accepts no obligation to correct or update the information. No opinion or recommendation is made within this research. This
report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report should not be relied upon
as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made.