Labour market, workforce in focus for Aussie small cap contractors - Citi

Imdex

07/12/2022 02:37

** Analysts at Citi believe labour market, higher workforce,
competition, and infrastructure spending will have higher
bearing on small-cap Australian contractors over the near term
    ** Brokerage gives higher weighting to labour metrics,
material pricing upside, and competitive advantage, given
ongoing skilled labour shortage and elevated inflation
    ** Mining services provider Imdex Ltd  IMD.AX  is Citi's top
pick on being "most immune" to a tight labour market, with
growth potential independent of higher workforce; rates it "buy"
    ** Brokerage "most cautious" on construction services
provider Monadelphous Group  MND.AX , rates it "sell" on delays
to securing projects and commencements
    ** Brokerage "buy" on NRW Holdings  NWH.AX  and Perenti Ltd
 PRN.AX  on solid order books, tailwinds for infrastructure
capex, and positive outlook
    ** Rates telecom infrastructure provider Service Stream
 SSM.AX  "neutral" on growth potential but potential near-term
weather-related impact
    ** Citi sees revenue growth of between 1% and 8% for the
coverage through to FY25 over FY22 numbers; IMD and NRW share
prices seen doubling in five-years
     Stock       Rating   Price Target    Revenue growth
                                        estimate till FY25
     Imdex         Buy       A$2.70           6.00%
  Monadelhpous    Sell      A$12.35           3.80%
  NRW Holdings     Buy       A$2.90           7.80%
    Perenti        Buy       A$1.29           1.90%
 Service Stream  Neutral     A$0.75           8.20%
 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))