This stock is worth a look for those investors with a 3 to 5 year timeframe in my opinion.
May not appeal to those that do not like low liquidity - but if a long term holder seeking growth in share price and dividend growth then definitely worth a look.
Too much to mention here - suggest that you visit their website and review at least the links at the bottom of this post.
There are only 23 million shares issued and they made an after tax profit of $2.88 million in 2006 on revenues of $26.6 million (pre tax profit of $4.12 million). They are debt free and aim to grow over the next 3 years to revenues of $100 million via organic growth and acquisitions while maintaining at least the current operating margins.
Were they to acheive this under the current capital structure then this would equate to profits after tax of about $11.5 million in 3 years - or 50 cents a share. If dilution of say 30% for acquisitions then this would equate to profits after tax of approx 38 cents a share.
Current pe is 12 in a sector average of 18.
Assuming they trade on a pe of just 15 in 3 years time (not unreasonable for a growth stock) then potential share price range of $4.95 to $7.50 (30 million vs 23 million shares).
A bit of info from the annual report...
Performance During 2005/2006
Saferoads Holdings Ltd celebrated its fi rst period as a publicly listed company with a strong fi nancial performance in the year to June 30. The Company achieved sales of $26.7 million, which represents an increase of 17% over the previous year. Net profi t after tax was $2.88 million which is 31.5% higher than the 2004-05 result and 8.4% above the prospectus forecast. The Company ended the year with a strong, debt free balance sheet (other than motor vehicle leases) and a robust working capital ratio of 2:1. Traditionally, for internal reporting purposes, we have segmented our business into specifi c product groups: Guide Posts and Flexible Signage; Crash Cushions and Barriers including Tenders; Workzone; Traffi c Calming; and Traffi c Control products. It is pleasing to note that the majority of these groups performed close to or better than internal forecasts. During the year, demand for our new Ironman steel safety barrier has been strong, and signifi cant forward orders have been received for 2006-07. A new 580m2 Ironman manufacturing facility was completed in December 2005 to enable increased production of Ironman to meet the increasing demand. Demand for our market leading Triton plastic water fi lled safety barriers was also strong with signifi cant forward orders already to hand. For both of these products, there is growing demand from end users as well as from hire companies. A major growth sector of our business has been the supply and installation of guardrail and wire rope safety barriers where we won and supplied in excess of $6 million in tenders in Queensland , New South Wales, Victoria and South Australia. With the introduction of our newly-licenced Gibraltar wire rope safety barrier we expect growth in this area of our business to continue. In April 2006 we successfully achieved accreditation for our Occupational Health and Safety Management system against ISO 18001:1999, adding to accreditation previously achieved against ISO 9001:2000 Quality Management System and ISO 14001:2004 Environmental Management System. A strong highlight of the year was the re-signing of our International Distributor and Licence agreement with Quixote Corporation of USA. This agreement ensures that Saferoads remains the sole distributor throughout Australia of Quixote’s wide range of road safety products for a further period of at least fi ve years. Quixote is the world’s leading developer and manufacturer of energy absorbing highway crash cushions, electronic sensing and measuring devices, computerized highway advisory radio, mobile and permanent electronic variable message signs and other transportation safety products and services. Towards the end of 2005-06, our new Pedestrian Barrier was released onto the market and has received excellent initial acceptance. Strong sales were made in May and June, and we have forecast signifi cant sales for the next year.
Looking Ahead
The outlook for 2006-07 is very encouraging. Increased road spending initiatives were announced in both the Federal and Victorian State Government budgets. As well as this, many large road projects are currently underway or are about to begin. This will continue to have a positive effect particularly with our hire company customers. Some of our products have already found application in EastLink (Vic), Lane Cove Tunnel (NSW), various Transport South Australia projects and on the Bruce Highway (Qld). We expect that major road construction projects such as the Pakenham Bypass (Vic), the North South Bypass Tunnel (Qld), the duplication of the Gateway Bridge (Qld) and the continuing upgrade of the Pacifi c Highway (NSW) will generate signifi cant demand for our products including Ironman barriers, guardrail and wire rope safety barriers, and crash cushion end treatments. Recent legislative changes in Queensland and New South Wales have mandated the mounting of attenuators to vehicles such as line-marking trucks. Our truck mounted attenuators have achieved wide acceptance and we are well situated to benefi t from these legislative changes. Late in 2005-06 we commenced the strengthening of our personnel resources and market presence in Queensland, New South Wales and South Australia. We have appointed new state managers in New South Wales and Queensland, and have replaced a distributorship in South Australia with a Saferoads’ regional sales manager. We are confi dent that these changes will signifi cantly increase our market penetration in these markets in a relatively short period of time. We have recently entered into licence agreements with two overseas companies which will enable us to enter the portable concrete barrier market, and to supply a very competitive wire rope safety barrier. We have already received positive market response for both these products, and we are confi dent that signifi cant sales will be generated as market awareness of these products develops. Our future growth strategy is to combine strong organic growth with strategic acquisitions. Our organic growth target for 2006-07 is to increase sales by more than 15% over 2005-06, whilst maintaining our relative profi t margins. We expect that a continuing aggressive approach to sourcing of materials and products both nationally and internationally will maintain our market competitiveness and refl ect positively in our overall performance as it has in the 2005-06 year. We are devoting signifi cant energy to the process of fi nding suitable strategic acquisitions. Any potential acquisition will need to be consistent with our core business and will need to be able to demonstrate that it will add sustainable long term value for the benefi t of our Shareholders. Thank you for your confi dence in Saferoads Holdings Limited. We look forward to another year of steady, sustainable growth, and to an ongoing increase in shareholder value.
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