Lincoln Crowne & Company Engineering & Mining Services Market Update For Week Ended 17 January 2014

1. WEEKLY
Australian Engineering & Mining Services
17 January 2014
WWW.LCC.ASIA
M&A Rumour and Activity
The Australian market was up over the week with the S&P / ASX100 ending at 4407 points. The Australian dollar continues
to drop, ending the week at US88 cents.
The new year started with the announcement that AMEC (LSE:AMEC), the second-biggest UK oil and gas engineering firm,
has agreed to buy US-listed Foster Wheeler (www.fwc.com) for A$3.6B. Both companies are major competitors to
WorleyParsons (ASX:WOR), with AMEC recently mooted as a potential merger partner.
Two local deals were also announced:
Fortescue Metals Group Limited (ASX:FMG) acquired two Christmas Creek Ore Processing Facilities from Crushing
Services International, a subsidiary of Mineral Resources Ltd (ASX:MIN) for circa $300M. The transaction is effectively an
early buy-out of a ten year lease arrangement and allows Fortescue to further reduce its iron ore production costs.
PPK Group Limited (ASX:PPK) signed an agreement to acquire the COALTRAM mining equipment business from
Diversified Mining Services Limited (www.dmsgroup.com.au) for $13M.
Finally, rumours have also been circulating that a European contracting group is believed to have been interested in
acquiring assets of Forge (ASX:FGE).
News Headlines and Key Sector Developments
Ticker News/Event
Ticker News/Event
ANG
Has been awarded a further, and to-date its largest Chilean
maintenance contract, by Codelco’s El Tesoro mine. The contract
is for the on-site supply of 30-40 people for the maintenance of
mobile equipment and the major repair of all mobile equipment offsite (trays and buckets)
MIN
Fortescue Metals Group Limited has assumed full ownership
and operational responsibility for the two Christmas Creek Ore
Processing Facilities by purchasing the plants from MIN. The
sale price for the plants was circa $300M
BSA
Appointed Mr Nicholas Yates as the company’s new Chief
Executive Officer and Managing Director. It is expected that Mr
Yates will commence with BSA in early March 2014
MND
Signed an infrastructure construction contract with the
Fortescue River Gas Pipeline Joint Venture. The contract,
valued at approximately $100M, is for the construction of a gas
pipeline in Western Australia
CDD
Andrew Buckley, Chief Executive Officer and Managing Director,
will retire from Cardno on 1 March 2014. Mr Buckley will be
succeeded by Mr Michael Renshaw, currently Executive General
Manager, International
OTC
Received approval from the Commonwealth Bank of Australia
for new finance facilities up to an amount of $8.2M. The
facilities provide OTC with an enhanced financial capacity to
undertake new and larger projects and to fund potential growth
opportunities
LEI
Secured a $135M three-year contract with Western Desert
Resources at its Roper Bar Project, a remote greenfield iron ore
mine in the Northern Territory. The contract commences on 13
January 2014 with Thiess leading the mining operations
SXE
Received a letter of award from Rio Tinto to perform electrical
and instrumentation works at the Cape Lambert Port B Project.
SXE has been awarded a phase 1 package for car dumpers
and screenhouse at a value of approximately $40M. Work is
scheduled to commence in January 2014
Source: Capital IQ, Thomson Reuters, LCC research
IMPORTANT DISCLAIMER
This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on information obtained from
sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such
information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation
to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be,
nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for
any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made.
Page 1
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2. WEEKLY
Australian Engineering & Mining Services
17 January 2014
Ticker Company Name
AJL
ASL
AAX
ANG
BLY
BKN
BYL
BOL
BSA
CDD
CGH
COF
DCG
DSB
DOW
EAL
EGN
EHL
EVZ
FWD
FGE
GCS
GNG
HDX
IMD
LEI
LCM
LYL
MLD
MAH
MYE
MIN
MCE
MND
NMS
NOD
NWH
OTC
PRG
RCR
RQL
SND
SDM
SSM
SWL
SXE
STS
SWK
TPP
TSE
UGL
VMG
WDS
WOR
WTP
AJ Lucas Group Limited
Ausdrill Limited
Ausenco Limited
Austin Engineering Limited
Boart Longyear Limited
Bradken Limited
Brierty Limited
Boom Logistics Limited
BSA Limited
Cardno Limited
Calibre Group Limited
Coffey International Limited
Decmil Group Limited
DeltaSBD Limited
Downer EDI Limited
E&A Limited
Engenco Limited
Emeco Holdings Limited
EVZ Limited
Fleetwood Corporation Limited
Forge Group Limited
Global Construction Services Limited
GR Engineering Services Limited
Hughes Drilling Pty Limited
Imdex Limited
Leighton Holdings Limited
Logicamms Limited
Lycopodium Limited
MACA Limited
MacMahon Holdings Limited
Mastermyne Limited
Mineral Resources Limited
Matrix Composites & Engineering
Monadelphous Group Limited
Neptune Marine Services Limited
Nomad Building Solutions Limited
NRW Holdings Limited
OTOC Limited
Programmed Maintenance Services
RCR Tomlinson Limited
Resource Equipment Limited
Saunders International Limited
Sedgman Limited
Service Stream Limited
Seymour Whyte Limited
Southern Cross Electrical Engineering
Structural Systems Limited
Swick Mining Services Limited
Tempo Australia Limited
Transfield Services Limited
UGL Limited
VDM Group Limited
WDS Limited
WorleyParsons Limited
Watpac Limited
WWW.LCC.ASIA
Market Cap Open Price Close Price Week High Week Low
(AUD Million)
(AUD)
(AUD)
(AUD)
(AUD)
307
279
113
297
205
902
44
81
26
938
134
59
326
15
2,126
78
47
140
8
182
91
84
80
55
119
5,345
99
166
413
163
53
2,045
105
1,573
80
17
346
20
385
426
35
71
153
58
99
120
33
63
6
446
1,097
22
122
4,265
183
1.05
0.97
0.71
3.65
0.44
5.53
0.39
0.17
0.12
6.35
0.45
0.25
2.21
0.30
4.89
0.64
0.16
0.27
0.04
2.97
1.25
0.47
0.53
0.31
0.66
16.38
1.39
4.10
2.53
0.14
0.69
11.42
0.89
17.30
0.05
0.06
1.28
0.10
3.24
3.34
0.14
0.88
0.68
0.20
1.24
0.77
0.51
0.29
0.04
0.87
6.96
0.01
0.84
16.38
1.01
1.15
0.90
0.67
3.60
0.45
5.33
0.40
0.17
0.12
6.49
0.43
0.23
1.93
0.31
4.89
0.64
0.15
0.24
0.04
3.00
1.06
0.49
0.53
0.27
0.57
15.85
1.43
4.25
2.34
0.13
0.70
10.99
1.11
17.04
0.04
0.06
1.24
0.11
3.26
3.12
0.14
0.90
0.69
0.21
1.27
0.74
0.52
0.29
0.04
0.87
6.69
0.01
0.84
17.28
1.00
1.15
0.99
0.72
3.79
0.46
5.55
0.41
0.18
0.12
6.52
0.45
0.26
2.22
0.35
4.95
0.65
0.17
0.27
0.04
3.13
1.21
0.49
0.53
0.29
0.66
16.38
1.47
4.35
2.56
0.14
0.77
11.48
1.12
17.35
0.05
0.06
1.32
0.11
3.30
3.39
0.16
0.90
0.69
0.21
1.27
0.77
0.54
0.30
0.04
0.88
7.05
0.01
0.86
17.74
1.01
1.05
0.86
0.65
3.50
0.42
5.26
0.39
0.15
0.12
6.17
0.43
0.23
1.92
0.30
4.67
0.62
0.15
0.24
0.04
2.94
0.86
0.47
0.52
0.25
0.55
15.54
1.37
4.04
2.20
0.13
0.69
10.32
0.89
16.38
0.04
0.06
1.23
0.11
3.15
2.90
0.14
0.87
0.67
0.20
1.23
0.73
0.52
0.29
0.04
0.84
6.52
0.01
0.78
16.38
0.97
Weekly Volume
% Change
▲
▼
▼
▼
▲
▼
▲
—
▼
▲
▼
▼
▼
▲
—
▼
▼
▼
▼
▲
▼
▲
—
▼
▼
▼
▲
▲
▼
▼
▲
▼
▲
▼
▼
▼
▼
▲
▲
▼
—
▲
▲
▲
▲
▼
▲
—
▲
▲
▼
▲
—
▲
▼
9.5%
-7.3%
-5.6%
-1.4%
2.3%
-3.6%
2.6%
0.0%
-4.2%
2.2%
-5.6%
-8.0%
-12.7%
3.3%
0.0%
-0.8%
-6.3%
-11.1%
-4.8%
1.0%
-15.6%
4.3%
0.0%
-14.5%
-14.4%
-3.2%
2.5%
3.7%
-7.5%
-3.7%
1.4%
-3.8%
24.7%
-1.5%
-8.5%
-6.3%
-2.7%
5.0%
0.6%
-6.6%
0.0%
2.3%
0.7%
2.5%
2.4%
-3.3%
2.0%
0.0%
8.6%
0.6%
-3.9%
33.3%
0.0%
5.5%
-1.0%
Trend
EV/
EV/
EBITDA
EBIT
NM
NM
2.6x
4.8x
2.9x
3.8x
7.0x
8.5x
3.9x 11.5x
7.5x 11.0x
2.2x
3.8x
3.7x
7.9x
3.7x 10.8x
8.1x
9.7x
3.0x
6.0x
7.5x 13.7x
4.2x
4.7x
2.1x
2.9x
3.8x
6.9x
7.0x
8.2x
NM
NM
3.2x
9.3x
6.5x
9.0x
5.5x
9.1x
0.2x
0.3x
3.6x
5.7x
5.9x
6.4x
4.3x
6.2x
3.4x
4.5x
3.2x
6.3x
6.1x
6.5x
4.3x
4.6x
3.3x
5.0x
1.3x
2.7x
2.3x
3.3x
6.3x
9.6x
9.7x 128.0x
5.8x
6.6x
74.4x
NM
1.3x
1.7x
2.6x
3.5x
2.3x
3.2x
6.8x
8.3x
5.9x
8.0x
2.9x
5.9x
7.4x
8.0x
2.3x
5.0x
NM
NM
3.8x
4.2x
2.7x
3.3x
2.9x
9.5x
2.1x
4.1x
NM
NM
5.1x 10.1x
15.2x 28.4x
NM
NM
4.6x 10.2x
8.4x
9.6x
2.5x 11.8x
So urce: Capital IQ, LCC research
IMPORTANT DISCLAIMER
This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on information obtained from
sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such
information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no obligation
to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be,
nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for
any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made.
Page 2
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