RCR Tomlinson Limited (ASX: RCR)

Robust Performance in 1HFY18 and Positive outlook at the back of winning new contracts: RCR Tomlinson Limited (ASX: RCR) is a diversified engineering and infrastructure company, working with world’s leading organisations to provide intelligent engineering solutions to the Infrastructure, Energy and Resources sectors. Group’s revenue from continuing operations during 1HFY18 was recorded at $940.1 Mn vs $471 Mn in 1HFY17, marking a growth of 100% Year on Year (YoY). The sale spiked up due to product mix growth coupled with new contracts wins during the period. EBIT from continuing operations came at $22.8 Mn in 1HFY18, which is a marking growth of 51% YoY on the back of strong contribution from the infrastructure business during the same period. Further, the energy business performance got improved due to the commencement of several projects and shutdowns in 1HFY18. NPAT from continuing operations stood at $16.3 Mn in 1HFY18, up by 63% YoY. RCR’s financial position remains strong with Net Cash of $84.7 Mn as on 31 December 2017.

The board of the company had declared an unfranked interim dividend for six months ending 31 December 2017, of 2.5 cents per share and this is to be paid on 5 April 2018 with an ex-dividend date of 14 March 2018.

Moreover, the company has been awarded a $93 Mn contract with BAE systems Australia. Under the contract, the company will deliver facility management services for the Australian Defence Force Jindalee Operational Radar Network (“JORN”) phase 6 project. This contract is for a term of 5 years with an option for a further term of 5 years. Hence, we believe that this contract will provide significant growth of facilities management services business.

RCR stock price has risen by 6.96% in the past three months and is trading at slightly higher levels in terms of price to earnings ratio. The stock looks “Expensive” at the current market price of $4.13
 

Financial Performance (Source: Company Reports)
 

Reliance Worldwide Corporation Limited (ASX: RWC)

Upgraded earnings guidance: Reliance Worldwide Corporation Limited, the global innovator on providing water solutions to built environment, has projected its FY18 EBITDA to be in the range of $150m to $155m against the EBITDA for FY17 of $120.7m. The group has increased the range from the earlier forecast of $145m to $150m as advised in August 2017. Meanwhile, for the half year FY18, group’s NPAT is of $41.5m (up 17.5%) and included a higher net interest expense as a result of increased external borrowings which funded the acquisition of Holdrite in June 2017. Further, a reduction in income tax expense of US$2.0 m from changes to the federal corporate tax rate contained in the Tax Cuts and Jobs Act passed by the USA Government in December 2017, impacted the result. An interim dividend of 3.5 cps franked to 100% has been declared, and this is an increase of 16.7% over the comparative period dividend of 3.0 cps. While the group is leveraging the strong top line growth and business expansion, and a positive impact from US North American Winter has also been highlighted to be known in the coming months; the stock looks “Overvalued” at the current price of $4.14

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