The margins for KP Electric in the maintanence would lead you to think another acquisition/bolt on will be made in this sector. They bought $2.72M EBITDA for $6.8M plus the earn outs. They can buy another $5.5M of EBITDA with thier cash on the same metrics plus have debt facilities as well. With a national footprint there would be cost synergies with bolt on acquisitions i.e. closing offices/accounting functions/etc. With Cable Logic I estimate that would take them to around $9M EBITDA. Contract wins for Tempo in the mining services space should be regarded now as the icing on the cake to thier new core business. Keep tendering by all means and yes they will eventually win work and large contracts but I'd rather have the comfort of a recurring revenue business with multi year long term maintanance contracts that the guy running his electrical business out of the back of his ute wearing a fluro with "FULLY WIRED" printed on the back can't compete with.
TPP Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
