AAL - Alfabs Australia

[System]

Alfabs is a market‑leading, diversified group of companies that primarily operates across two divisions in Australia – Mining and Engineering.

The Mining division primarily sells to national and internationally owned black coal mines in Australia.

• Equipment hire: Providing equipment hire to operators in the underground black coal mining industry in Australia.
• Mining consumables: Supplying mining consumables and spare parts to mining operators.
• Workshop capability: Providing repair, maintenance, overhaul and construction of underground mining equipment.

The Engineering division primarily sells to Tier 1 and Tier 2 contractors for public and private infrastructure projects.

• Engineering Fabrication: Fabrication of heavy structural steel for public and private infrastructure projects in Australia.
• Engineering Services: Site based installation and pre‑assembly works supporting the fabrication business unit.
• Protective coatings: Provides abrasive blasting and protective coatings for clients and internal projects.
• Forklift and Access: Hire of forklifts, elevated work platforms (EWPs) and materials handling equipment.
• Logistics: Australia wide transport and logistics services.
• Labour Hire: Provision of personnel for engineering and site‑based maintenance and upgrade projects.

It is anticipated that AAL will list on the ASX on 28 June 2024.

Alfabs Group | Engineering Services in the Hunter Valley Region

The Alfabs Group provides comprehensive mining & engineering services across the Hunter Valley region, Queensland & Australia-wide. Call 1300 253 227.

alfabs.com.au

 

[Dona Ferentes]

Listing date	28 June 2024 ; 11:00 AM AEST ##
Company contact details	https://alfabs.com.au/ Ph: 1300 253 227
Principal Activities	Underground mining equipment hire and engineering
Issue Price	AUD 0.25
Issue Type	Ordinary Fully Paid Shares
Security code	AAL
Capital to be Raised	$18,000,000
Expected offer close date	20 June 2024
Underwriter	Not underwritten. Blue Ocean Equities Pty Ltd (Lead Manager).

 

[BossMan.]

Listing on the 28/06/2024 IPO @ $0.25

Equipment hire biz Alfabs Australia seeks $70m listing

Bell Potter Securities and Blue Ocean Equities were tapped as joint lead managers on the deal.

www.afr.com

Expected market capitalization between $69.7m and $71.7m

 

[BossMan.]

Company beat all it's forecast included in there prospectus:

I always find companies like this interesting, they give insight into whats going on in the mining industry. Interestingly they note several new coal mines have opened and there is strong demand for there underground equipment.

Additionally they appear to be at the forefront of mine safety.

Company is expecting to pay >50% of Net Profit After Tax as dividends.

Added to the watch list. The low volume is my primary concern.

 

[BossMan.]

As I have been a advocate of this stock, ill give more of my rationale/thinking;

• Company is focused on paying down debt and becoming debt free.
  • "We are aggressively repaying debt while growing working capital in a disciplined and structured manner. This focus on balance sheet strength is crucial as we position ourselves to capitalize on future opportunities. As we work towards becoming a net debt-free company, our financial resilience will be a key asset as we move forward.", Matthew Torrance (CEO) Annual Report
• Company is focused on bolt-on-acquisitions that fit with there existing business model, not trying to break into new and expensive industries; "FY25 and beyond our focus remains clear: we are committed to delivering on the growth strategy we have laid out with key growth pillars of new contracts, new mining equipment, refurbishments and bolt-on acquisitions", Matthew Torrance (CEO) Annual Report
• Hire industry regarding Coal Mining, I cant imagine many new emerging mines would be wanting to purchase expensive mining equipment outright especially with the narrative around the long term viability of coal mining (seems like risk most wouldn't want).
• Coal Mining is going to be a continued requirement globally as the AI Revolution takes place. Currently renewable is not reliable enough for the energy requirements needed for data centers.
  • "However renewable energies are intermittent and not fully controllable, making it challenging to synchronize their production with the consumption of data centers"

I believe we will see a resurgence in coal demand globally for the next 2 - 5 years to meet the energy stability required for the advanced data centers globally. Nuclear will eventually overtake it in my opinion, however a Nuclear Power Plant takes on average 11 - 12 years to build, and I imagine money poorer nations will look at the opportunity cost of building a coal fired power plant or investing billions into nucelar...

Alfabs is well positioned to sell the "shovels" to the miners.

 

[finicky]

Reminds me a bit of Emeco (EHL) in which I have a small holding; particularly the part about the purchase of second hand mining equipment and overhauling it to add to its hire fleet. Don't think EHL has exposure to coal mining though, or certainly not a focus. Emeco has a long unsuccessful history on the share market.

AAL Not Held