Lincoln Crowne & Company market update report on the Australian Engineering & Construction Sectors including coverage of deals announced during the week by Puma Energy and Air Change International

1. WEEKLY
Australian Engineering & Mining Services
18 October 2013
WWW.LCC.ASIA
M&A Rumour and Activity
The Australian market closed the week at its highest level in almost 5 years after US Senate leaders reached a last-minute
deal to temporarily extend the debt ceiling and reopen government. The Australian dollar also jumped on the US debt news,
hurting US dollar-exposed resource companies.
UGL continues preparations for its upcoming demerger with DTZ (UGL’s property services company) being presented to
analysts in Sydney. UGL still aims to complete a demerger in FY15.
Two other small deals were announced last week.
Small listed Air Change International limited (ASX : AHJ) announced the acquisition of Fan Coil Industries
(www.fancoil.com.au). AHJ is a HVAC player that has been suspended for over 12 months due to a lack of shareholder
spread. Fancoil, which designs and manufactures fan and coil equipment for the HVAC industry, is based in Smeaton
Grange, Australia. Terms of the deal have not as yet been announced. In October 2012 Air Change acquired Summit
industrial Chillers for about $1M upfront and a profit based earn out structure.
Netherlands Oil Products Storage & Distribution company Puma Energy Beheer BV announced the acquisition of Caltex
Australia’s Bitumen Importing Business, which is based in Sydney. The sale is subject to FIRB approval, and again terms
have thus far not been disclosed.
News Headlines and Key Sector Developments
Ticker News/Event
Ticker News/Event
AJL
Executed a new loan facility agreement with Kerogen Investments.
The restructured facility will be drawn down by AJL and used to
refinance all amounts outstanding under an existing facility
agreement with Kerogen
RCR
Has been awarded $125M in new strategically important
contracts across its Resources and Infrastructure businesses
DSB
Has announced a range of initiatives to reduce its debt position.
These will result in a debt level of approximately $14M at 31
December 2013, representing a 44% reduction from the debt level
at 30 June 2013, which was some $25M
RCR
Mr Lloyd Jones will join the RCR Board as an Independent Non
Executive Director following RCR’s Annual General Meeting in
November. Mr Jones has significant experience in mining,
energy, construction and heavy industrial operations in
Australia, Asia and North America. Mr Kevin Edwards has also
advised the RCR Board of his intention to retire from the Board
at the end of RCR’s 2013 Annual General Meeting
IMD
Recorded 1Q14 combined revenue of $53.3M, down 28% from the
record achieved in the previous corresponding period (1Q13:
$73.7M) and a 9% decrease by quarter (4Q13: $58.3M). EBITDA
(including equity accounted VES International joint venture result,
yet excluding the profit on sale of approximately half their holding
in Sino Gas and Energy) down 84% to $2.7M from the previous
corresponding period
TSE
Provided an update on contracted revenue with order-book
$9.5B, down 13.6% from last year but up from December 2012.
TSE’s pipeline is $25.2B, down 16.8%. This reflects tighter
strategic focus on growth sectors and slow six months for
contract awards across the economy outside of coal seam gas
Source: Capital IQ, Thomson Reuters, LCC research
IMPORTANT DISCLAIMER
This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on 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.
Page 1
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2. WEEKLY
Australian Engineering & Mining Services
18 October 2013
Ticker Company Name
AJL
ASL
AAX
ANG
BLY
BKN
BYL
BOL
BSA
CDD
CGH
CLO
COF
DCG
DSB
DOW
EAL
EGN
EHL
EVZ
FWD
FGE
GCS
GNG
HDX
IMD
LEI
LCM
LYL
MLD
MAH
MYE
MIN
MCE
MND
NMS
NWH
OTC
PRG
RCR
RQL
SND
SDM
SSM
SWL
SXE
STS
SWK
TPP
TSE
UGL
VMG
WDS
WOR
WTP
AJ Lucas Group Limited
Ausdrill Limited
Ausenco Limited
Austin Engineering Limited
Boart Longyear Limited
Bradken Limited
Brierty Limited
Boom Logistics Limited
BSA Limited
Cardno Limited
Calibre Group Limited
Clough Limited
Coffey International Limited
Decmil Group Limited
DeltaSBD Limited
Downer EDI Limited
E&A Limited
Engenco Limited
Emeco Holdings Limited
EVZ Limited
Fleetwood Corporation Limited
Forge Group Limited
Global Construction Services Limited
GR Engineering Services Limited
Hughes Drilling Pty Limited
Imdex Limited
Leighton Holdings Limited
Logicamms Limited
Lycopodium Limited
MACA Limited
MacMahon Holdings Limited
Mastermyne Limited
Mineral Resources Limited
Matrix Composites & Engineering
Monadelphous Group Limited
Neptune Marine Services Limited
NRW Holdings Limited
OTOC Limited
Programmed Maintenance Services
RCR Tomlinson Limited
Resource Equipment Limited
Saunders International Limited
Sedgman Limited
Service Stream Limited
Seymour Whyte Limited
Southern Cross Electrical Engineering
Structural Systems Limited
Swick Mining Services Limited
Tempo Australia Limited
Transfield Services Limited
UGL Limited
VDM Group Limited
WDS Limited
WorleyParsons Limited
Watpac Limited
WWW.LCC.ASIA
Market Cap Open Price Close Price Week High Week Low
(AUD Million)
(AUD)
(AUD)
(AUD)
(AUD)
358
443
212
293
196
1,009
43
85
32
952
145
1,142
58
432
21
2,156
84
47
160
11
218
423
89
98
67
166
5,841
131
176
442
176
83
2,137
68
1,648
83
392
19
324
481
49
71
167
57
106
177
28
78
7
671
1,281
10
120
5,533
168
1.32
1.39
1.65
3.54
0.43
5.82
0.40
0.18
0.13
6.30
0.46
1.46
0.23
2.29
0.44
4.67
0.68
0.16
0.22
0.06
3.50
4.98
0.50
0.68
0.34
0.80
17.49
1.88
4.61
2.56
0.14
1.02
11.40
0.69
17.32
0.05
1.35
0.10
2.84
3.58
0.19
0.91
0.74
0.17
1.36
1.10
0.45
0.36
0.06
1.26
7.70
0.01
0.79
21.83
0.82
1.34
1.42
1.72
4.00
0.43
5.96
0.39
0.18
0.14
6.59
0.46
1.47
0.23
2.56
0.46
4.96
0.74
0.15
0.28
0.06
3.60
4.91
0.52
0.65
0.32
0.79
17.32
1.88
4.53
2.56
0.14
1.10
11.49
0.72
17.85
0.05
1.41
0.10
2.74
3.53
0.20
0.92
0.75
0.20
1.36
1.10
0.45
0.36
0.04
1.31
7.85
0.01
0.83
22.42
0.91
1.34
1.45
1.73
4.13
0.45
6.04
0.42
0.18
0.14
6.75
0.48
1.48
0.23
2.58
0.50
4.99
0.75
0.16
0.28
0.06
3.64
5.03
0.52
0.68
0.34
0.80
17.80
1.92
4.73
2.70
0.15
1.10
11.49
0.73
17.90
0.05
1.42
0.10
2.92
3.61
0.20
0.92
0.78
0.21
1.40
1.10
0.48
0.36
0.06
1.34
8.08
0.01
0.86
22.48
0.94
1.26
1.34
1.60
3.51
0.41
5.62
0.39
0.17
0.13
6.25
0.45
1.46
0.20
2.27
0.44
4.56
0.66
0.15
0.22
0.06
3.37
4.80
0.47
0.62
0.31
0.72
16.78
1.85
4.35
2.50
0.13
1.00
10.99
0.69
16.91
0.05
1.33
0.09
2.74
3.43
0.19
0.91
0.72
0.17
1.36
1.03
0.40
0.34
0.04
1.22
7.67
0.01
0.77
21.72
0.82
Weekly Volume
% Change
▲
▲
▲
▲
▲
▲
▼
—
▲
▲
—
▲
—
▲
▲
▲
▲
▼
▲
—
▲
▼
▲
▼
▼
▼
▼
▲
▼
—
▲
▲
▲
▲
▲
—
▲
—
▼
▼
▲
▲
▲
▲
—
▼
▲
▲
▼
▲
▲
—
▲
▲
▲
1.5%
2.5%
4.2%
13.0%
1.2%
2.4%
-1.3%
0.0%
7.7%
4.6%
0.0%
0.7%
0.0%
11.8%
4.5%
6.2%
9.6%
-6.3%
25.0%
0.0%
2.9%
-1.4%
4.0%
-4.4%
-4.5%
-0.6%
-1.0%
0.3%
-1.7%
0.0%
3.7%
8.4%
0.8%
3.6%
3.1%
0.0%
4.1%
0.0%
-3.5%
-1.4%
2.6%
0.5%
1.4%
17.6%
0.0%
-0.5%
1.1%
1.4%
-21.8%
4.0%
1.9%
0.0%
5.7%
2.7%
11.0%
EV/
EV/
EBITDA
EBIT
NM
3.2x
5.2x
6.9x
3.8x
8.1x
2.2x
3.7x
4.1x
8.2x
3.1x
7.0x
7.4x
5.6x
2.5x
3.9x
7.3x
NM
3.3x
7.6x
6.4x
3.3x
3.7x
7.5x
4.9x
4.5x
3.5x
8.4x
4.7x
3.5x
1.4x
3.5x
6.6x
6.4x
6.1x
87.5x
2.9x
2.2x
6.3x
6.9x
3.6x
7.5x
2.6x
NM
4.3x
4.6x
2.6x
2.6x
NM
6.3x
16.8x
NM
4.6x
10.6x
2.3x
Trend
NM
5.8x
6.7x
8.4x
11.4x
11.9x
3.7x
8.1x
12.2x
9.9x
6.3x
7.2x
13.6x
6.3x
3.4x
7.0x
8.6x
NM
9.6x
10.5x
10.6x
4.0x
5.9x
8.2x
7.1x
5.9x
7.4x
8.9x
5.0x
5.3x
2.8x
4.9x
9.9x
83.7x
6.9x
NM
3.9x
3.1x
7.6x
9.3x
7.2x
8.1x
5.9x
NM
4.7x
5.6x
8.6x
5.0x
NM
12.4x
31.4x
NM
10.1x
12.0x
10.6x
So urce: Capital IQ, LCC research
IMPORTANT DISCLAIMER
This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on 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.
Page 2
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