This report is an updated version of the report published on 14 July 2025 at 12:10 PM AEST.

Austin Engineering Ltd (ASX: ANG)

Austin Engineering Limited (ASX: ANG) is an Australia-based global engineering company. ANG is engaged in designing and manufacturing of loading and hauling solutions, including off-highway dump truck bodies, buckets, water tanks and related attachments, supporting both open-cut and underground operations. Complementing its proprietary product range are repair and maintenance services performed in its workshops and on clients' mine sites, and spare parts. 

Recommendation Rationale – SELL at AUD 0.385

• Trading Around Resistance: ANG’s share price has crossed its second resistance (R1) of AUD 0.382 recommended on 1 July 2025; and, it can face resistance as broad market weakness puts pressure on stocks.
• EBIT margin downgrades despite revenue growth: Austin revised FY2025 underlying EBIT guidance down from approximately AUD 50 million to AUD 41 million, despite raising revenue expectations to AUD370 million. This suggests that higher revenues are not translating into stronger profitability, indicating near-term margin pressure.
• Operational Strain in Chile Facility: The Chile manufacturing facility experienced significant capacity strain due to a demanding, strategically important contract for truck bodies. This ramp-up has negatively impacted operational efficiency and margins, leading to the EBIT downgrade.
• Short-Term Margin Impact from Production Shift: To improve margins, Austin plans to redirect a significant portion of production for the Chile contract to its Batam facility. While this is expected to improve margins over time, it creates short-term operational complexity and margin pressure.

ANG Daily Chart

(Source: REFINITIV; Analysis by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (FY June'26E) (Illustrative)

The stock might trade at a slight premium to its peers, as FY2025 revenue guidance was raised to approximately AU$370 million, an 18% increase over FY2024, driven by strong demand in the Americas (USA and Chile) and the APAC region.  Also, recent investments in manufacturing capacity, especially in the USA, have enabled higher order fulfilment. For conducting the valuation, the following peers have been considered: Service Stream Ltd (ASX: SSM), Straker Ltd (ASX: STG), and Ventia Services Group Ltd (ASX: VNT).

Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to sell the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 0.385, as of 14 July 2025 at 11:35 AM AEST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 14 July 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.