Industrea Ltd (IDL) has continued its rapid growth in China, reflected by news of a record $18.8 million order from a new Chinese coal customer.
The new order signed with IDL subsidiary, Wadam Industries, is for the delivery of eight Advanced Mining Technologies (AMT) directional drilling and methane gas drainage systems to Yangquan Coal Industry.
"This is the largest single sale ever secured by AMT and Wadam in China, and we anticipate there are more to come as the nation's coal miners venture further underground into its gassy coal mines, making our best-of-breed systems indispensable," managing director Robin Levison said.
"More than 70 AMT directional drilling and methane gas drainage systems are currently in operation worldwide, with the majority stationed in China."
Industrea is also seeing growth in other international markets along with Australia, in line with the ongoing pick up in the global resources industry and the renewed confidence of leading producers.
In the previous announcement the company outlined full-year guidance and an update on half-year results.
Growth across mining services, diesel equipment, technology and international divisions will boost FY2010 revenue to $300-$330 million and deliver a net profit of between $48-$54 million
The first-half net profit is expected to be between $17.2-$17.8 million (prior comparable period $24.6 million), due to the impact of the Xstrata Handlebar Hill contract loss by subsidiary Huddy's Mining Services in January 2009 and a delay in the timing of technology sales.
Industrea is entering the new year on a solid growth footing, with a strong pipeline of mining services contracts and a robust order book reflecting continued growth in the key China market
Directors say the full benefits of new contracts secured in the the first half of the year will be fully realised in the second half.
Industrea will again pay an interim dividend - the amount and timing of which will be announced when the half-year results are finalised, and shareholders will be able to participate in the dividend reinvestment plan.
The company's FY2010 results are expected to mirror the recovery from the global financial crisis, with the first half effectively reflecting the depths of the crisis and the second half the recovery being led from China, together with the actions taken by the company to both find replacement markets for lost business and to position itself to benefit from the Chinese-led recovery.
SHARE PRICE MOVEMENTS
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Shares of Industrea yesterday rose 2c to 36c and touched 38.5c. Rolling high for the year is 51c and low 9.1c. Dividend is 1.25c to yield 3.42 per cent. Earnings per share is 1.81c while price/earnings ratio is 19.89. The company has 955.7 million shares on issue with a market cap of $344 million.
"Industrea has begun the new year on a positive note and the company is seeing robust trading conditions for the second half across its expanding business divisions," Mr Levison said.
"For Huddy's, we are seeing increasing growth as industry confidence returns which has led us to recommence contract mining operations at Handlebar Hill."
Huddy's is anticipating further contracted work at Cockatoo Coal's Baralaba coal mine in line with expected production increases.
It will also benefit from the recent expansion of its mining equipment fleet at Rio Tinto's Mt Thorley Warkworth mine for the full six months in the second half, along with additional contract extensions in Queensland's Mt Isa region.
Industrea's diesel equipment division continues to gain traction from the coal production growth in its key market of China.
Industrea Mining Equipment built and shipped 18 vehicles in the first half, with 27 vehicles expected to be shipped in the second half to match rising demand for its longwall roof support and shearer carriers.
In addition, PJ Berriman is currently running at full capacity in its domestic market and is examining plans to manufacture a vehicle solely for the Chinese market.
Industrea shipped four AMT directional drilling and methane gas drainage systems in the first half of FY2010, and expects to ship another five by April to China's gassy mines, where a production and safety drive is in full swing with Government and industry support.
"We are also actively pursuing our global diversification strategy, with growth in export orders to other markets including South Africa and South America also anticipated and with our spares pipeline continuing to rise in line with our overseas shipments," Mr Levison said.
"China though will remain the key market for Industrea, and we have already secured additional capacity for spares sales to the leading China Shenhua Group due to recurring orders from our Product Support Centre.
"Industrea has also been invited as a key equipment provider to the Shenhua Group to supply a range of spares to Shenhua's private bonded warehouse complex which should improve access to the wider group," Mr Levison disclosed.
Industrea is leveraged to the growth of Asia's emerging economic superpower, and with excellent relationships with the leading Chinese mining groups, it expects to achieve record sales to this key market in 2010.
"We have entered the New Year with a strong product and technology order book, and are well placed to seize the opportunities in front of us to deliver growth in shareholder value across the whole Industrea group," Mr Levison concluded.
BACKGROUND
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Industrea Ltd is headquartered in Queensland, comprising a group of companies involved in the provision of mining products and services, with diversified revenue streams arising from asset management and engineering services.
The company joined the Australian Stock Exchange list on June 7, 1999.
The group's products and services are sold on a wide geographical footprint that includes the US, South Africa, Russia, Indonesia and Papua New Guinea with offices in five Australian locations, South America and Beijing.
Its customers are based in these areas and include BHP Billiton, Rio Tinto Coal, Anglo American, BMA, Barrick Gold, Vale, Xstrata and several of China's leading mining groups including China Shenhua Energy Company, Jincheng Anthracite Mining Group and Shanxi Asian American Daning Energy Co.
Industrea is constantly expanding its range of products and services to suit its clients' needs.
Its current range of mining products includes collision avoidance systems, underground directional drilling including methane gas drainage, underground flameproof and explosion proof vehicles for use in longwall and personnel movement, contractor management, mobile asset tracking and a driver safety performance index
The company also distributes a select range of OEM mining products for Sandvik Voist Alpine, Tagor, Pirtek, Marathon Tyres, Hydco International and Filter Technology Australia.
Industrea also offers fully integrated outsourced contract mining services through its Huddy's mining services subsidiary including mine planning, project supervisions, heavy mining equipment hire, trained equipment operator hire, overburden, coal and ore body mining and transportation, drill and blast planning and activity, crushing, and transport to conveyor, railhead or other transport provider.
Industrea's continued expansion strategy is based on the continued organic growth of existing business units and further acquisitions that will be both profitable and synergistic.
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depth background.
IDL Price at posting:
37.0¢ Sentiment: Hold Disclosure: Held
