Listed on the SGX since 2012, Civmec is one of the dual-listed companies available to Singapore investors. Civmec is listed on the Austrailan Stock Exchange (ASX: CVL) and Singapore Exchange (SGX: P9D).
Civmec is Australia’s largest heavy engineering company and its operations are primarily based within Australia. This geographical focus has not inhibited their growth. In fact, the company achieved a record order book of A$1.15 billion as of 31 January 2021. On the back of strong performance, Civmec just released their first interim dividend of A$0.01, on top of their regular annual dividend, on 26 March 2021. The company is also confident of continued opportunities in Australia as their existing orders in the defence business is able to provide long-term revenue for the group until 2029, without considering the other business segments of the company or future new contracts. As most of their major supply chains are located in Australia, the company has been relatively unaffected by the pandemic with no projects cancelled and no supply bottleneck.
Civmec’s engineering capabilities are impressive. They own the largest fabrication facility of its kind in Australia (set on 200,000 sqm of land) and the largest undercover modularisation and maintenance facility (with 53,000 sqm usable floor area). In early 2016, Civmec also acquired Australia’s largest privately-owned engineering and shipbuilding company, enhancing their marine capabilities. This is a company capable of building submarines, offshore patrol boats and frigates for the Royal Australian Navy, gas piplines, LNG plants, lithium hydroxide conversion plants. They have also built the Sydney Light Rail and Perth Stadium.
For investors keen to invest in Australia and/ or heavy engineering sector, Civmec is a company to consider. Here are 5 things to know about Civmec’s business.
For someone who is new to your company, can you explain (in as few words as possible) what Civmec does?
We are the largest heavy engineering company in Australia and a Tier-1 contractor focused on construction, manufacturing and maintenance work for the energy, resources, infrastructure, as well as marine and defence sectors. We have been involved in some of Australia’s most complex projects, including those in remote and logistically challenging environments. In a nutshell, if it can be built, Civmec can build it.
Please elaborate on Civmec’s business segments and focus areas.
Civmec is a construction and heavy engineering company based in Australia. We provide a comprehensive suite of turnkey solutions to the resources, energy, infrastructure, as well as marine and defence sectors.
Our capabilities are diverse, but they fall broadly within the areas of construction, manufacturing and maintenance. The services we offer include, but not limited to, fabrication of structures, industrial insulation, shipbuilding, offshore logistics, civil works, and surface treatment.
The Group is able to take on projects of all sizes and complexities. Our clients include major energy and resources companies – such as Chevron, Rio Tinto, BHP, Fortescue Metals Group and Alcoa – as well as government bodies in Australia.
Having a “moat” or a competitive advantage is something many investors look for in companies they invest in. Can you share how Civmec has a strong business advantage?
There are no companies we know of with the same extensive range of capabilities in fabrication, modular construction and maintenance that we have. We have the largest undercover modularisation and maintenance facility in Australia, big enough to house the equivalent of 12,000 passenger buses.
With this facility, we can build and maintain large vessels, as well as complex modules for projects in the resources and energy sectors. We are also able to take on a significant portion of an overall project without having to sub-contract out certain functions to third parties.
In short, we do everything in-house, making us a one-stop shop for our customers. We are also diverse enough in terms of sectoral exposure to be able to face different business cycles all at once.
Why should investors take a closer look at Civmec?
The Group has been profitable every year since inception in 2009 and we are still actively seeking opportunities for further growth. This is evident in the last few years as we invested heavily to expand our facilities.
We believe that the sheer scale of what we have put in place is now unparalleled in Australia and matches the best facilities globally. Our substantial manufacturing and construction capabilities, as well as resilient in-house supply chain management put us in a good position to seize more growth opportunities and secure significant projects across all the sectors we operate in.
Our investments are bearing fruit, as seen from the substantial increase in our revenue and earnings over the last few years, as well as our current record order book of A$1.15 billion.
What are the key focus areas for Civmec in the next 2-3 years?
Our deep expertise in construction and manufacturing has enabled us to grow steadily over the years. We aim to develop recurring revenue streams even as we continue to tender for more construction and manufacturing projects. This will involve scaling up our maintenance business.
One major enhancement to our flagship Henderson facility in Western Australia is the addition of an assembly and sustainment hall. This is the largest undercover modularisation and maintenance facility in Australia and has enough space to house the equivalent of 12,000 passenger buses. With this facility, we can build and maintain large vessels, as well as complex modules for projects in the resources and energy sectors.
We intend to spend about A$10 million over the next 18 months to set up a permanent facility in Port Hedland in Western Australia to better support our clients in the resources and energy sectors. This facility will have fabrication and maintenance capabilities and provide our clients access to local manpower for their short- and long-term needs on a recurring basis.
For the defence sector, we are building 10 offshore patrol vessels in Henderson for the Royal Australian Navy. This project will provide long-term revenue until 2029. The Australian federal government has also designated Henderson as a strategic site for the building and maintenance of various naval ships.
We also see more opportunities in the infrastructure space. Australia’s federal government recently announced an additional commitment of A$15.2 billion over 10 years for road, rail and community infrastructure projects, as part of the stimulus measures to support employment in the aftermath of COVID19.
We are also keen in renewable energy projects. Initiatives involving clean energy such as hydrogen and wind are increasingly taking off in Australia. We believe there is a lot we can offer in this space, given our construction and engineering capabilities.
Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 1 June 2021 and have been republished with permission. You can read more about Civmec on the SGX website.
Get The Latest Bite-sized Investment News, Ideas & Insights
It's free! Don't miss out on the latest financial market movements. FSMOne aims to help investors around the world invest globally and profitably, follow FSMOne’s Telegram for bite-sized finance analyses and exclusive happenings.