Increased confidence and strategic review
Northbridge’s results for FY20 were in line with market expectations, showing both revenues and adj. PBT higher y-o-y despite the impact of the pandemic on trading. Of greater significance was news of a strategic review of the business, with the Board examining the disposal of Tasman, the Group’s oilfield services unit.The FY20 results showed positive trading momentum and cash generation with net debt falling to give a net debt/EBITDA of 0.9x. With the Group well advanced in negotiations with its banks to provide greater headroom on its facility, we think that the loan notes’ early redemption is increasingly likely.
Crestchic has several opportunities for further growth, and with focused investment we expect it to continue its strong progress. On the current valuation Crestchic is trading at a marked discount to its hire service peers.
With the proposed disposal of Tasman we believe there is scope for a material re-rating of the stock as investors focus on the strengthening returns, good growth prospects, and a more environmentally friendly NBI.
Northbridge Industrial Services is engaged in the sales and hire of industrial equipment on a global basis for use in applications in the oil and gas, shipping, construction, and power and utility sectors. Co. has two main reportable segments: Crestchic loadbanks and transformers, which is involved in the manufacture, hire and sale of loadbanks and transformers; and Tasman oil tools and loadcells, which is involved in the hire and sale of oil tools and loadcells.
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