5 Things To Know About AusGroup, An Integrated Service Solutions Provider Headquartered In Australia

While most people would think of SGX as predominantly focused on Singapore companies, there are companies listed on the SGX that are based outside of Singapore. One such company is AusGroup which is an integrated service solutions provider headquartered in Australia.

AusGroup has over 2,000 employees with operations mainly in Australia. They provide planning, maintenance and construction services across different sectors and about 60% of their revenue come from the energy sector, 30% from the resources sector and 10% from the industrial sector. Their major clients include Chevron, Shell, Woodside, Rio Tinto and BHP.

Notably in FY2021, AusGroup has secured a 10-year maintenance contract with Chevron, which is the longest maintenance master contract awarded to date in the Australian oil and gas market. This contributed significantly to the order book increase to over A$1 billion and is an affirmation of the company’s operational expertise.

While the pandemic had affected AusGroup’s revenue in FY2020, FY2021 showed consistent quarter-on-quarter revenue growth. The company reported a profitable position of $1.2 million after tax on a revenue of $195.1 million.

For investors keen to invest in Australia and/ or a solutions provider to energy, resources and industrial sector, here are 5 things to know about AusGroup’s business.

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For someone who is new to your company, can you explain (in as little words as possible) what AusGroup does?

AusGroup offers a range of integrated service solutions to the energy, mining, and industrial sectors across Australia and South-East Asia. Our diversified service offering supports clients at all stages of their asset development and operational schedule.

Through subsidiaries AGC, MAS, and NT Port and Marine, we provide maintenance, construction, access services, commissioning & hand over and port & marine services. With over 30 years of experience, we are committed to partnering with our clients to build, maintain and upgrade some of the region’s most challenging projects.

The principal activities of the Group are:

• provide preventative and breakdown maintenance services;
• provide construction services;
• provide access services;
• provide fabrication and manufacturing services; and
• provide port and marine services.

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How has the Group’s order book grown over the years? How do you plan to sustain this growth going forward?

The Group has had a significant increase in our order book in Mar 2021, when we announced a 10-year maintenance contract with Chevron. Our six years of delivering services to Chevron was critical in securing this contact win, which was longest maintenance master contract awarded to date in the Australian oil and gas market.

Our order book reached above A$1 billion in Mar 2021, which is the highest in our 30 years of operations and maintained close to A$1 billion since then. It represents a healthy book-to-bill ratio of five times based on FY21 revenue.

Going forward, we are focused on securing a mix of multi-year maintenance contracts and larger construction contracts to continually replenish the order book.

We see potential organic growth in our order book arising from the work and contracts already completed from customers in the iron ore and lithium sectors.

Iron ore market outlook – Iron ore prices remained strong due to supply disruptions. Exports expected to grow from 874 million tonnes to 996 million tonnes between 2019 and 2025 from productions at large new Western Australian mines. (Source: Office of the Chief Economist Australia)

Lithium market outlook – The lithium market is expected to triple in the next five years as the world embraces electric vehicles (EVs). Australia has 30% of the world’s lithium resources, with the majority located in Western Australia. (Source: Office of the Chief Economist Australia)

What do you think are some key drivers or trends in the various sectors the Group service?

There is a significant push for decarbonisation globally. The construction and maintenance services that AusGroup provides are critical in building and maintaining such decarbonisation projects in the coming decades. LNG continues to make up a large element of energy requirements and will remain a key driver for decades to come. AusGroup signed a 10-year maintenance contract with Chevron to maintain its onshore and offshore LNG production facilities in Mar 2021. These facilities have an expected lifespan of at least 40 to 50 years. These services are scalable and transferable to support new decarbonisation projects (e.g., lithium and hydrogen).

The trend to electrify transport solutions is also a significant and structural growth that can provide opportunities for AusGroup. Australia is emerging as a leader in the lithium market which is the critical component for lithium batteries.

Renewable energy market outlook – At the end of 2020, 76 large-scale wind and solar projects were under construction in Australia, representing more than 8 GW of new capacity and employing over 9,000 workers. A total of A$19 billion is invested into large-scale renewable energy projects across Australia with A$2 billion in Western Australia. (Source: Clean Energy Council Australia)

Waste-to-energy market outlook – Global waste-to-energy market is expected to reach US$41.7 billion by 2025 and will grow at a healthy growth rate of more than 5.1% over 2018 to 2025. AusGroup is currently working with Acciona on two waste-to-energy projects in Kwinana and Rockingham, Western Australia. (Source: Industry Research)

How does the Group plan to expand your focus on the renewables and new energy markets? Any developments in this areas?

The services we provide to our current customers are transferrable to clients in the renewable and new energy markets.

We are constructing two waste-to-energy plants in Western Australia. We believe that with the expected growth trajectory in this sector with multiple plants planned for construction over the coming years, coupled with the Group’s experience in constructing such facilities, AusGroup will be able to tap on these future opportunities.

We have experience in constructing lithium infrastructure and maintaining lithium processing plants (lithium hydroxide plants). We believe that there is significant growth in the lithium market due to the electrification of transport solutions to meet decarbonisation targets.

We are also in discussions to assess the viability of supporting the construction of a green hydrogen plant that would utilise the export capability of our port facility in Northern Australia.

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Having a “moat” or a competitive advantage is something many investors look for in companies they invest in. Can you share how AusGroup has a strong business advantage?

AusGroup’s main priority in the short term is to focus on our core strengths of providing multi-disciplinary services of mechanical, scaffolding, insulation, and fabrication services across the Oil & Gas, Resources, and Industrial landscape.  The Group’s core capabilities of SMP (structural, mechanical, piping), industrial insulation, maintenance, surface treatment, refractory, and access solutions across these sectors provides our clients with a focused and targeted delivery platform to execute projects on time and to the highest standards.

Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 1 December 2021 and have been republished with permission. You can read more on the SGX website. 

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