Edison Investment Research - AJ Lucas Group (AJL) AJ Lucas Group - Positive momentum in drilling services

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Edison Investment Research

Sanjeev Bahl

AJ Lucas Group - Positive momentum in drilling services

AJ Lucasâ€™s FY18 (to end June 2018) results highlighted a material increase in drilling service revenues (+70%) and margins (+635% EBITDA). Based on AJLâ€™s current order book and leading indicators, management expects rig utilisation and mining sector drilling activity to be sustained in FY19 with robust margins after AJLâ€™s exit from legacy contracts in the coal seam gas and water markets. Our updated valuation reflects expected engineering and construction sales proceeds of A$25m and an increased valuation for drilling services. The net result is an increase in our P50 valuation for AJL Lucas of A$0.93/share (from A$0.86/share).

25/09/2018 8 EN

Underlying

AJ Lucas Group

AJ Lucas Group is an infrastructure, construction and mining services group focusing on providing services to the energy, water and wastewater, resources and property sectors. Co. has three operating segments: drilling, which provides drilling services for the degasification of coal mines and the recovery and commercialization of coal seam gas and associated services; engineering and construction, which provides construction and civil engineering services, as well as installation of conduits and pipes using horizontal directional drilling; and oil and gas, which explores for and commercializes unconventional and conventional hydrocarbons in Europe, Australia and the U.S.

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AU000000AJL1 Australian Securities Exchange Australia

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Sanjeev Bahl

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AJ Lucas Group - Positive momentum in drilling services

Monthly LMI Update Independent Investment Research

AJ Lucas Group - Riverstoneâ€™s interest in Cuadrilla acquisition

Feasibility Study Results in December to be a Catalyst for this Junior

Basilea Pharmaceutica - Cresemba milestone payments continue to roll in

AAC Clyde Space - Solid start to the year with further order growth

Tinexta - Typical seasonality in Q124

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