Is BOL the next Emeco (EHL)

Both are equipment rental companies with high capital intensity and fixed cost leverage, both are heavily exposed to resources and coal in particular, both are also exposed to the east coast infrastructure boom and both are still highly geared (EHL more so)..... However in the past year EHL has been more than a ten bagger while BOL has significantly underperformed EHL and other leveraged mining services names. One of the major factor driving this relative underperformance is size in my view. Effectively EHL was large enough for sophisticated institutional investors to bother whereas BOL is currently slightly too small for institutional mandates. These investors typically possess analytical advantages, the right framework to deal with cyclical companies (I.e negative returns are often a positive value indicator) and understand the tremendous operating leverage within rental companies. The lack of awareness of BOL's improving fortunes will likely change over time and bridge some of the relative performance gap and pricing inefficiency. The opportunity for retail investors is to buy in advance of the feedback loops which dominate in cyclical companies, these include firstly returns mean reverting and then generally overshooting, then institutional buying once market caps exceed $100m, then the ability for BOL to accretively acquire other distressed crane companies once equity reflation has occurred. It is likely over time you will see sophisticated investors either rotate out of Emeco into BOL and/or investors will copy the Emeco playbook and buy BOL given its got the same characteristics and the same demand drivers but is materially cheaper. BOL’s AGM highlighted it’s improving fortunes and operating leverage with EBITDA in the first 4 months of the year coming in at $8m, implying around $11-12m for 1H18 reflecting hugely significant earnings growth relative to 1H17’s $4.5m (>140%!). Post this announcement, insto investors will now be doing work on BOL, in addition to the smaller (promotional) research houses who will likely begin pushing the story aggressively.