Activity levels have improved further since the AGM, with today’s trading update confident with regards to strategy, the strong pipeline of orders and demand levels within its markets. We have upgraded estimates (again) to reflect this, with rental markets particularly buoyant, which should result in Crestchic delivering record profitability levels in FY22 with adj. EPS estimates now 37% higher.
The purchase and the subsequent refurbishment of used equipment is enabling Crestchic to meet rising rental demand. Utilisation rates are at record levels and new project demand stretches into FY23. Combine that with price increases plus strong performance in all sectors, and you have the background to the current virtuous circle.
Contracts have also been agreed for the disposal of the remaining portion of the Tasman oil tools business in the Middle East. The purchaser has paid a deposit and completion should occur within weeks, once the local regulatory approvals are forthcoming.
The upgrades feed through to a large increase in our fair value calculation (based on a DCF and peer group comparison). Now at 283p / share (up from 249p) that represents a material premium to the current price.
