# SRG - SRG Global



## galumay (10 April 2018)

I cant see a thread for GCS so I have opened one, I have been following and researching GCS for about 6 months and finally took a position today at 67c, i have an IV range for it of 80c-$1 and I think its pretty compelling buying below 70c.

The company has reduced its debt to insignificant levels, divested itself of the equipment hire segment that was break even at best, and added an interest in Gallery Facades, the cladding services business to its portfolio.


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## Mr Bear (10 April 2018)

I bought shares at 85c, it’s worth at least $2. It’s been trading poorly but not sure why, good yield, low pe, 10% revenue growth and solid cash flow.. happy to hold for the moment, not a strong 1H but believe 2H will be much better.


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## galumay (12 June 2018)

Interesting merger announced today, maybe some arbitrage opportunity depending how prices settle out. Seems to me its more favourable to SRG shareholders to me, but SRG fell more than GCS!!


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## System (6 December 2018)

On December 3rd, 2018, Global Construction Services Limited (GCS) changed its name and ASX code to SRG Global Limited (SRG).


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## rcm617 (28 February 2019)

Dropped about 20% after a poor HY19 report and FY19 forecast. According to management it is primarily due to timing with cost incurred this year and revenue being delayed. They have had some good project wins lately and should get some more work with problems with cladding in high rises.


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## Pollocks (30 May 2019)

My pick For the June Stock Picking Competition. New contract wins coming in with hopefully more to follow. The bottom may be in.


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## galumay (30 May 2019)

One of the more undervalued businesses on the ASX, the market misunderstood the merger, and its taken a couple of quarters to flow through to the bottom line. Most of the contracts were already known, but the market has reacted as if they were all new.


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## peter2 (31 May 2019)

SRG appeared in my BO scans this afternoon for obvious reasons. There's a weekly HL, which is a requirement for me for a reversal opportunity after such a strong down trend.


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## jbocker (4 June 2019)

SRG Global have made 4 separate announcements over the last couple of weeks of 4 new contracts totalling excess of 157M. This follows a few announcements of new contracts in early April. I thought this looks promising maybe time to buy a few and keep for the longer term.


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## galumay (4 June 2019)

I honestly think SRG is one of the more undervalued businesses on the ASX, see my post above. I have added to my position in the mid 30's.


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## jbocker (5 June 2019)

galumay said:


> I honestly think SRG is one of the more undervalued businesses on the ASX, see my post above. I have added to my position in the mid 30's.



I bought a few too low 40s. Now waiting patiently.


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## galumay (5 June 2019)

I think the inflection point will likely be the full year results later this year, and i suspect patience will be rewarded!


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## verce (5 June 2019)

Market Cap ~$180 million is a bit too pricey for me!

Good luck.


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## galumay (5 June 2019)

Are you just trolling? Or do you really have no idea what market cap is? I think I explained it to you once before, it is simply the number of shares on issue multiplied by the current price, its got no specific connection to value. Its not a metric for comparing different businesses.


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## verce (5 June 2019)

A high market cap means a business is expensive, a low market cap means it is cheap. It has everything to do with value.


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## galumay (5 June 2019)

verce said:


> A high market cap means a business is expensive, a low market cap means it is cheap. It has everything to do with value.




Ok, time to apply the ignore button, someome who has so little idea what they are talking about is definitely better ignored!  The derp is deep.


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## willoneau (5 June 2019)

verce said:


> Market Cap ~$180 million is a bit too pricey for me!
> 
> Good luck.



are you saying you think the SP is too high?


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## Smurf1976 (5 June 2019)

verce said:


> A high market cap means a business is expensive, a low market cap means it is cheap. It has everything to do with value.



Compare BHP with some much smaller mining company.

Same industry but one's doing it on a far larger scale than the other. No surprise then to find that BHP's market cap is far higher than the other company but that says nothing at all about valuation relative to their actual business and what return you'd likely obtain by investing.


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## jbocker (27 June 2019)

Good to see continuation of contract awards to SRG. $20M Façade project in Brisbane Queensland where two buildings will be transformed into one with an infill in between. The façade will make it all look like one building.
https://www.asx.com.au/asxpdf/20190627/pdf/4464w5rqcpk3j1.pdf
​


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## rcm617 (30 June 2019)

Seems to be finally heading back up after announcing a string of contracts in the last few weeks. Hopefully heads up to its price pre the HY results. My pick for the July Stock picking comp.


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## jbocker (25 July 2019)

Picked for my August 2019 tipping. 
As previously explained by @galumay the SP dropped significantly at the midyear announcement in Feb. There has since been numerous contract awards, and I expect the already recovering price will continue and maybe kick with a report in August. (I assume the FY report will be in August).


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## galumay (18 August 2019)

I have built my position further in SRG, its one of my highest conviction positions and I believe that the results for the FY will cause a significant re-rate of the business.


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## Clansman (18 August 2019)

jbocker said:


> Picked for my August 2019 tipping.
> As previously explained by @galumay the SP dropped significantly at the midyear announcement in Feb. There has since been numerous contract awards, and I expect the already recovering price will continue and maybe kick with a report in August. (I assume the FY report will be in August).




Contract awards are one thing but margins are another thing entirely. I wouldn't describe the SP as already recovering. Going to new 5 year lows a number of times this year certainly doesn't suggest so.


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## galumay (27 August 2019)

Well that turned into a train wreck, one I got entirely wrong, the merger with SRG has completely destroyed the value in what was a good business in GCS. Profit gone, FCF turned negative. Going back to see where I got it so wrong, first feeling is that I knew GCS pretty intimately and given what a good little business it was, I assumed the merger would create some scale and actually make a better business. Instead the opposite happened and there has been significant destruction of value.


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## jbocker (27 August 2019)

Yes at one point dropped 8.5 cents (from 47c close yesterday). Only 3c down at near close.
I think maybe hold tight, mergers are not easy and they say optimisation is complete and are now into growth phase. Well lets see what happens!


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## Skate (27 August 2019)

galumay said:


> Well that turned into a train wreck, one I got entirely wrong, the merger with SRG has completely destroyed the value in what was a good business in GCS. Profit gone, FCF turned negative. Going back to see where I got it so wrong, first feeling is that I knew GCS pretty intimately and given what a good little business it was, I assumed the merger would create some scale and actually make a better business. Instead the opposite happened and there has been significant destruction of value.




Hi@galumay

The chart below showed so much promise that evaporated so quickly, I feel your pain - thank god I was only in the ride for 6 weeks.

Skate.


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## galumay (27 August 2019)

jbocker said:


> Well lets see what happens!




Thats my inclination for now, I try not to rush decisions. I am annoyed that I misunderstood what was going on and my conviction in the business was borne out of my knowledge of the financials of the GCS business and I was using that as the basis for my valuation. Rooky error.

I will spend some more time on the details and see where my conviction lays after that!


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## peter2 (21 December 2019)

It's a few months later and the chart looks much better. However price has not yet broken the two year sloping resistance line. Technically price remains in the downtrend. This indicates that SRG needs more time as the longer term insto investors haven't accumulated a significant amount of the supply that's available every time price rallies a little.  I've placed SRG in by reversal watch list for now.






_Edit: This might be one to consider for the 2020 CY comp. _


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## jbocker (23 December 2019)

Still holding a little of this one from its old Structural Systems Limited days (STS) Pre GCS and now known as SRG. It took me a while to track the old ticker code STS.
Still a few hundred dollars in front from my purchase and sell but it has been trickling many little dividends over the years. Been involved in many big projects over its 50 year history.


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## peter2 (29 December 2019)

SRG - is my top pick for the CY 2020 comp. I view this as a turnaround opportunity. The success will depend on the management team of whom I know nothing. 
The price chart has not changed since the last time I posted.


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## peter2 (31 May 2020)

The price of SRG continues to fall back to March 2020 lows (corona virus selloff). This indicates that longer term investors have given up on the company and have been selling. However last weeks trading volume has increased significantly indicating another batch of SRG hopefuls have started buying. It's not getting my money, but it's good enough for a monthly selection.


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## Dona Ferentes (31 May 2020)

Whilst not a falling knife, to put it bluntly the market has no interest in this company. That makes it interesting.


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## finicky (31 May 2020)

Noted that this is just a monthly pick.
The management of this company is an avoid for me. They lavished themselves with an unusually large amount of performance rights when Global Construction Services and SRG were separate companies. I think from memory these represented around 10% of the total equity issued in SRG. Most were of an opinion that GCS was the superior company of the two, better ROE, cash in bank for starters, but issuance of SRG shares to GCS shareholders was on a 1:1 basis as consideration in the merger. Worse, it was the managers of SRG who assumed the leadership of the merged company. Worse, the unusually large swag of aforementioned performance rights that the SRG managers held premerger were either paid out or converted to ordinary shares upon merger, can't remember which, think it was conversion.

Recently, unsurprisingly, the management were awarded 5.7m performance rights in the new SRG (26/11/2019). Why stop now?


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## peter2 (5 June 2020)

SRG becomes more interesting. I noted the increase in volume last week as I selected SRG for the monthly comp. This weeks volume is even higher. Something is going on, as the demand kicked price significantly higher today (1st Blue bar off low).  No news, but there are definitely others sniffing at this bottom.


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## Skate (5 June 2020)

peter2 said:


> SRG becomes more interesting. I noted the increase in volume last week as I selected SRG for the monthly comp. This weeks volume is even higher. Something is going on, as the demand kicked price significantly higher today (1st Blue bar off low).  No news, but there are definitely others sniffing at this bottom.




@peter2 another post worthy of a second & third look. The Ducati Daily Blue Bar Strategy confirms there is interest. As they say, "a picture paints a thousand words".

*SRG Daily Chart*






Skate.


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## jbocker (23 July 2020)

4th announcement this month of award contracts out today. So far 3 separate $25M contracts, and a $40M today. (see separate announcements below)
Good to see awards being granted. 
110M since start of the New Financial Year.
https://www.asx.com.au/asxpdf/20200723/pdf/44krnjq3qhmf6n.pdf
https://www.asx.com.au/asxpdf/20200721/pdf/44kpj558cdph0s.pdf
https://www.asx.com.au/asxpdf/20200715/pdf/44kjy2zjdmgmbx.pdf
https://www.asx.com.au/asxpdf/20200707/pdf/44k9bwh39zds6z.pdf


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## galumay (23 July 2020)

The big reveal for me will be the AR, will SRG have been able to convert extra revenue into FCF this year? Its a tough business and it needs razor sharp management to extract profitable margins from it.


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## jbocker (28 July 2020)

Another one to add to the  month. SRG Global Secures ~$30m Specialist Civil Water Infrastructure Projects with Water Corporation. 
Two projects in WA country Wheatbelt and Goldfields.
https://www.asx.com.au/asxpdf/20200728/pdf/44kwkp25m5hwfn.pdf


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## galumay (28 July 2020)

The contracts certainly keep rolling in!


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## jbocker (5 August 2020)

New Zealand returned to normal business levels. ~$50M New works in NZ. 
Good signs we want to see in these times. Heading in the right direction.
https://www.asx.com.au/asxpdf/20200805/pdf/44l69y1qfg0jj0.pdf


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## galumay (5 August 2020)

Lets hope there is enough margin to drop thru to the bottom line!


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## galumay (25 August 2020)

Ok mea culpa, I was wrong & I am out. Once again this business just cant translate contracts into profit. One of the red flags I was looking for when the AR landed today was management's history of never discussing profit, EPS, NPAT, FCF or any form of real income. Sure enough they manage to not discuss it all in any of the documents released to market today. The only place was where they legally couldn't avoid it, in the P&L the negative EPS was stated.

Everywhere else all they talked about was bull**** earnings (EBITDA), as a result I sold out this morning, the big lesson here is I should have sold out 12 months ago, they did the same thing in the past, which I had documented in my investment journal, hence it was the first thing I looked for this morning.

It reminds me why a focus on understanding the financials of business is imperative if you want to be an investor as opposed to a speculator/gambler. Also a focus on Management execution and communication - clearly a long term problem here.

Well they say you learn most from your losses & mistakes, hopefully thats the takeaway from this!


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## Dona Ferentes (25 August 2020)

management's history of never discussing profit, EPS, NPAT, FCF or any form of real income. Sure enough they manage to not discuss it all in any of the documents released to market today. The only place was where they legally couldn't avoid it, in the P&L the negative EPS was stated.

Everywhere else all they talked about was bull**** earnings (EBITDA),

_- to paraphrase Charlie Munger_


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## galumay (25 August 2020)

LOL! Yes, I should have credited Charlie with that one!


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