Industrials: Investors give a thumbs up to Stealth’s latest acquisition, thumbs down to Decmil’s latest downgrade
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Shareholders of industrial distribution company Stealth (ASX:SGI) have responded positively to its latest acquisition.
The company owns various industrial equipment brands including BSA and Heatleys.
Last November it impressed the market with the purchase of a 50-year-old tool supplier as well as strong sales results.
Today Stealth told ASX shareholders it was buying the assets of Skipper Transport Parts for $4.2 million. WA-based Skipper provides servicing and accessories to trucks, trailers and other automotives as well as the agricultural sectors.
The deal, to be funded by debt finance, will include five branch store locations and 12 other stores in WA and Queensland as well as its 34 employees, 1,250 customers and 300 suppliers.
Stealth anticipates approximately $18 million in revenue and $1.1 million in earnings in the first 12 months after the transaction.
The company says it is highly complementary to existing operations and Stealth would be better for it.
“The STP purchase and merger is transformational in terms of a significantly expanded product and high-touch solutions offering, distribution supply chain infrastructure, eCommerce platform and deeper customer and supplier relationships,” said Stealth boss Mike Arnold.
“Stealth is well positioned to continue growing its business and capitalise on investment and growth opportunities over coming years with a fous on capital discipline.
“This is underpinned by our expanding diversified business portfolio, resulting in a steady flow of recurring sales activity.”
Diversified infrastructure play Decmil Group (ASX:DCG) meanwhile saw a modest drop after downgrading its revenue guidance.
The company tips $300-$320 million in revenue in FY21 although its earnings guidance was an upgrade expected to be between $6 million and $10 million.
While the company’s order book is at $590 million, it blamed COVID-19 impacts delaying work into FY22 thereby shifting revenue into that calendar year.
While Decmil claimed it had preferred and contracted work over $400 million in FY22 it has been a tough 18 months for shareholders.
COVID-19 was actually not the only major hit to the company in 2020, with two particularly troublesome clients – one terminating a contract with no notice and the other withholding progress payments – leading to a bottom line half-yearly loss of $75 million.
The company was forced to undertake a $50 million recapitalisation and has lagged ever since.