Northbridge Industrial Services
Ticker: NBI Exchange: AIM

Northbridge Industrial Services is a holding company focused on two divisions. Crestchic, the larger division, is a specialist provider of electrical equipment used primarily to commission, test and service within power reliability and power security markets globally. Tasman Oil Tools is a rental specialist of down-hole tools to the oil & gas, geothermal energy and coal bed methane markets

Liquidity: 'plan B' already underway

Northbridge has produced preliminary results that were ahead of expectations across several metrics. The Group achieved a significant milestone in returning to profitability for the first time in five years.

Margins continue their upward trajectory, aided by the high levels of operational gearing. Geographical expansion continued, following the opening of new depots in Singapore (Tasman) and Pennsylvania (Crestchic).

Reported cash flow continued to be positive, driven by a marked increase in EBITDA to £8m and, following the purchase of a hire fleet from a failed competitor, capex declined. Net debt fell to £6.4m, representing healthy net debt/EBITDA and gearing levels of 0.8x and 18%, respectively.

While the strong H2 2019 trading continued into Q1 2020, restrictions on trade associated with COVID-19 related lockdowns began to influence activity by the end of the period. Additionally, the sharp decline in the oil price has created uncertainty surrounding its customers’ ability to invest in new projects for 2021.

But Management has taken immediate action on costs and use of cash to maintain its strong liquidity position. And the balance sheet, the cost base and geographical diversification of the order book remain in comfortably better shape than in late 2014 when the Group last dealt with a slowdown.

At 124p / share , the NAV currently sits on an 85% premium to the stock price and gives a price-to-book ratio of 0.5x. 


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