IPG - IPD Group

[System]

IPD Group is a national distributor and service provider to the Australian electrical market. IPD can trace its history back to the 1950s when it was a division of English Electric, a company which specialised in the manufacturing of fuse links, switchgear and overhead busbars. In 2005, the management team acquired the industrial product distribution business from what was then Alstom in an MBO and IPD was formed.

Through organic and inorganic initiatives, IPD has successfully expanded its operations to nine locations across six states to provide a truly national offering to its customer base. In addition to this, IPD commenced outsourced operations in Colombo, Sri Lanka in 2010 to provide low cost and scalable support services to its Australian operations, before establishing its own Sri Lankan subsidiary in 2019.

IPD consists of two core divisions:

• The distribution of products for quality global electrical infrastructure brands such as ABB, Elsteel, Emerson and Red Lion; and
• The provision of services, including installation and commissioning, calibration and testing, maintenance and repairs and refurbishment.

IPD operates in the Australian electrical market and has direct and indirect customers in various end markets including but not limited to commercial construction, infrastructure, resources, education, food and beverage, water and waste management, power utilities and renewables, healthcare, residential construction, data centres, hospitality and tourism. Within these end markets there are particular segments which are experiencing high growth including industrial control systems security, data centres, renewable energy and electric vehicles.

It is anticipated that IPG will list on the ASX on 17 December 2021.

Home - IPD Group

Welcome ToIPD GROUP Our Businesses Reliably serving Australiafor over 70 years IPD Group is an Australian-owned ASX-listed company (ASX:IPG), with a national footprint servicing the electrical industry. It has been marketing quality global brands including ABB, GE, Socomec, DEHN and Elsteel for...

ipdgroup.com.au

 

[Dona Ferentes]

Listing date	17 December 2021 12:00PM AEDT ##
Company contact details	https://www.ipdgroup.com.au/ Ph: 1300 556 601
Principal Activities	Electrical equipment distributor and service provider
GICS industry group	TBA
Issue Price	AUD 1.20
Issue Type	Ordinary Fully Paid Shares
Security code	IPG
Capital to be Raised	$40,000,000
Expected offer close date	13 December 2021
Underwriter	Bell Potter Securities Limited (Underwriter/Lead Manager).

 

[Dona Ferentes]

from under IPO for the first week or two, IPG has risen to $1.63. An upgrade in Profit Guidance early Feb was catalyst for a strong lift, and the 1H22 numbers confirmed IPO numbers to a large extent. Market cap now $140million.

• The Group continues to perform very strongly, recording record half year revenues and profits
• Strong performance across all product and customer segments during H1 FY22
• Revenue growth of 54% on pcp including 23% organic growth
• Gross profit margins reduced in line with the forecast, reflecting the lower margins on the additional products and customers transitioned from ABB
• The underlying EBIT margin (excluding IPO costs) has increased from 8.8% to 10.5%, as the Group benefits from the operational leverage of recent acquisitions
• the Group expects further benefits to be realised in FY23

FY22 forecast upgrade
• Positive outlook for continued growth; earnings guidance upgraded against FY22 prospectus forecast
• FY22 statutory EBITDA forecast range between $17.6m and $18.4m, up from $16.0m per prospectus forecast ‒ the statutory forecast includes the impact of $1.6m of IPO costs
• Equates to a FY22 proforma EBITDA forecast range between $19.7m and $20.5m, up from $18.1m per prospectus forecast
• The Group has intentionally built higher than usual inventory levels as it seeks to mitigate the global supply chain related risks, while maintaining the high standards of customer service
• Increased inventory levels provides protection against significant cost increases by suppliers

 

[divs4ever]

yes this caught my eye earlier in the weekend

i haven't decided yet if to add it to my watch-list , but now i have noticed it am liable to glance at it more frequently

 

[Dona Ferentes]

and moving into an interesting space.... got to ATH of $1.75

.... completion of the acquisition of the assets of Gemtek Group Pty Ltd, https://gemtek.com.au/. The acquisition provides IPD with a complete, end-to-end solution in the fast-growing electric vehicle charger market.

Gemtek is a turn-key energy management and EV solutions provider, with over 15 years of design, project management and infrastructure maintenance experience. Based in Perth, Gemtek’s partners and customers include Development WA, Public Transport Authority of Western Australia, WALGA members and the major utility providers to WA.

Gemtek achieved $1.3m of revenues and breakeven earnings in FY21. The acquisition price, which was less than $500,000 with no additional earn out, was fully paid at completion of the acquisition on 04 April 2022. The assets of Gemtek comprise of Gemtek’s business name, domain name, customer list, jobs in progress, open customer quotes of approximately $14.3m and intellectual property owned by Gemtek in the EV charger market.

The Group is now able to provide a complete, end-to-end solution to EV charger customers including design, hardware, electrical infrastructure, installation, network management and maintenance solutions. The Group is one of a limited number that can provide this full suite of services in Australia.

IPD’s CEO, Michael Sainsbury, said he was very pleased with the Gemtek acquisition and the future growth prospects that it provides for IPD:

“While the relatively small scale of Gemtek reflects the current early life cycle state of the Australian EV charger market, this is an excellent business that provides a springboard for securing future growth in a market with rapid and exponential expansion expectations. As set out in our prospectus, the EV charger market is one of IPD’s key growth sectors and we plan to use the Gemtek acquisition as a platform from which to offer our customers a complete offering and develop our capabilities in the space. We expect that EV charging infrastructure and related services will make a significant contribution to the Group’s future earnings growth.”

 

[Garpal Gumnut]

and moving into an interesting space.... got to ATH of $1.75

.... completion of the acquisition of the assets of Gemtek Group Pty Ltd, https://gemtek.com.au/. The acquisition provides IPD with a complete, end-to-end solution in the fast-growing electric vehicle charger market.

Gemtek is a turn-key energy management and EV solutions provider, with over 15 years of design, project management and infrastructure maintenance experience. Based in Perth, Gemtek’s partners and customers include Development WA, Public Transport Authority of Western Australia, WALGA members and the major utility providers to WA.

Gemtek achieved $1.3m of revenues and breakeven earnings in FY21. The acquisition price, which was less than $500,000 with no additional earn out, was fully paid at completion of the acquisition on 04 April 2022. The assets of Gemtek comprise of Gemtek’s business name, domain name, customer list, jobs in progress, open customer quotes of approximately $14.3m and intellectual property owned by Gemtek in the EV charger market.

The Group is now able to provide a complete, end-to-end solution to EV charger customers including design, hardware, electrical infrastructure, installation, network management and maintenance solutions. The Group is one of a limited number that can provide this full suite of services in Australia.

IPD’s CEO, Michael Sainsbury, said he was very pleased with the Gemtek acquisition and the future growth prospects that it provides for IPD:

One of the few aspects only that concern me about IPG are the low volumes traded.

EYG and ERABYT

gg

 

[Dona Ferentes]

One of the few aspects only that concern me about IPG are the low volumes traded.

EGAD

Yep, its a boring pick n shovel provider. Probably destined to be a small caps fund favourite. I noticed it as Mirrabooka bought in at IPO (and they'll probably add to it over time). The lack of vol, and the gaps, make it hard to take a position with confidence.

(I've got one that is worse : EOL)

 

[Dona Ferentes]

IPG has been described as "the only profitable dividend paying EV exposure on the ASX " by a broker .... though its end-to-end charging solutions are only part of the biz with the acquisition of Gemtek last year.

A FY23 estimate is $15m NPAT and $23m net cash on balance sheet.

Market cap of $315million
... since listing:

 

[Dona Ferentes]

. Probably destined to be a small caps fund favourite. I noticed it as Mirrabooka bought in at IPO (and they'll probably add to it over time)

And just made an appearance on MIR top 20 for March at #17.

 

[Dona Ferentes]

A disclosed seller recently ... a Family trust.

Previous notice -- 11,189,965 ; 12.97%
and Present notice - 8,074,965 ; 9.35%

seems to be entities associated with Bacon family ... not a current director.

- probably sold to assorted small cap funds ... SP shrugged.

 

[Dona Ferentes]

and moving into an interesting space.... got to ATH of $1.75

still moving higher.

IPD Group Acquires EX Engineering

EX Engineering is a Perth-based business that specialises in the design, stocking, supply, modification, and repair of electrical hazardous area equipment (known as Ex equipment). This work involves a critical focus on safety, including adherence to rigorous certification processes, which results in significant barriers to entry in this segment.

Since 2013 the team at EX Engineering have been delivering market-leading solutions to meet Ex equipment needs across several industries including Oil & Gas, Mining, Manufacturing, and Agriculture. Their purpose-built workshop in Belmont, Perth is IECEx certified, which means the customised, designed, repaired, and assembled Ex equipment handled by EX Engineering is guaranteed to be compliant with relevant standards.

This acquisition will significantly enhance IPD’s Ex equipment offering to clients, with a focus on expanding the EX Engineering business to the Eastern States.

Transaction details
– Based on unaudited management accounts for the year to 30 June 2023, EX Engineering generated revenue of $12.4m and normalised EBITDA of $2.5m. Purchase consideration is $10.2m, consisting of $9.2m cash and $1.0m of newly-issued IPD shares, with the cash component to be funded from IPD’s existing cash reserves. The purchase price is subject to customary adjustments, along with an earn-out based on normalised EBITDA in the year to 30 June 2024 (the earn-out mechanism provides for a total consideration cap of $11.4m). The vendors of EX Engineering, who founded the company, will remain with IPD and lead the expansion of EX Engineering’s capability in the Eastern States. The acquisition is earnings accretive to IPD and is expected to complete later today.

Michael Sainsbury, IPD CEO, said : “Using IPD’s national sales force and footprint, we will be able to expand the successful EX Engineering model across Australia from its current base in WA. With EX Engineering in our portfolio, IPD can now supply electrical Ex equipment to our customers. We look forward to working with Warwick and Jenni Greville as well as the rest of the EX Engineering team to grow the business to its full potential”.


About Ex Equipment
– Ex equipment is equipment used in hazardous areas characterised by the risk of fires or explosions from flammable gases or dusts. The testing and certification of equipment, services, and competence of individuals utilising Ex equipment is governed by the IECEx System (International Electrotechnical Commission System for Certification to Standards Relating to Equipment for Use in Explosive Atmospheres).

 

[Dona Ferentes]

One of the few aspects only that concern me about IPG are the low volumes traded.

sometimes you just have to put in a bid. Since listing;

AMG

 

[Country Lad]

One of the few aspects only that concern me about IPG are the low volumes traded.

I bought these last November (and still hold) and yes, the volumes weren't high. Like others with low volumes I might consider, I looked at 1. how many shares on issue 2. how many of the shares on issues were held by insiders 3. what are the strengths of the business and importantly, 4. what is the probability of good growth of the business.

With all the right answers, I am more than happy to buy those with a low number of shares on issue and successes far outweigh the non performers. Advantage is that good performance will see rapid price increase but of course the opposite can also occur particularly if everybody wants to sell at the same time.

Homework needs yo be done and risk assessed. .

 

[Dona Ferentes]

a quiet achiever. Down a bit today but the entire market is nervous
.

.

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Outlook and Earnings Guidance
It is too early in the new financial year to provide a full year earnings outlook given domestic and global economic volatility and the recent acquisition of Ex Engineering. IPD’s market focus on higher growth non-residential sectors of the economy will continue. The Board will provide an update on Q1 trading performance at the IPD Group Limited AGM on 28th Nov 2023.

 

[Dona Ferentes]

and an acquisition. Has been trading around 4.20, there is a skinny disconut with the cap raise at $3.93.

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Highlights:
• IPD Group Limited to acquire CMI Operations Pty Ltd, a leading distributor of electrical cables and manufacturer and distributor of plug brands in Australia, from ASX listed Excelsior Capital Limited
• CMI is a strategically compelling acquisition in highly complementary sectors that extends IPD’s product suite, increases supplier diversity, strengthens its overall value proposition with existing customers and broadens customer reach
• The acquisition results in pro forma FY23A EPS accretion of over 30% (excluding synergies)
• Acquisition to be funded with a combination of new debt facilities and a $65 million equity raising comprising of a $40 million institutional placement and a $25million accelerated non-renounceable entitlement offer
• IPD also provides a H1 FY24 EBIT guidance of between $13.5-14.0 million

 

[Country Lad]

and an acquisition. Has been trading around 4.20, there is a skinny disconut with the cap raise at $3.93.

.

Interesting, the indication at this stage is that it will open at the $4.20 of last close. I imagine they will do the cap raise to institutions quickly.

 

[Dona Ferentes]

Interesting, the indication at this stage is that it will open at the $4.20 of last close. I imagine they will do the cap raise to institutions quickly.

the discount is narrow, so I think there'll be no problem. Instos already sounded out? and a willing seller?

the 4.20 was the pre-open, which may not hold ... either way, the deal looks fair.

 

[finicky]

Looks like an interesting company that I wasn't aware of. High ROE, but at around 5x book value well priced? No history to go on. As a recent buyer of Southern Cross Electrical (SXE), I uncritically buy into the electrification of things theme.

Not Held

 

[Country Lad]

Market obviously liked the whole deal. Opened at 450, now 468 up 12%. Will be interesting to see how that holds as I would expect some selling.

 

[Dona Ferentes]

Market obviously liked the whole deal. Opened at 450, now 468 up 12%. Will be interesting to see how that holds as I would expect some selling.

still holding above 4.60, as the retail entitlement offer opens.
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Electrification and energy transition:
• Electricity usage to double by 2050
• Decarbonisation: Since 2007, Australia cut its fossil fuel electricity use from 81% to 53% and is adopting renewables faster than the global average
• Decentralisation: Improved technology has boosted efficiency and affordability in the decentralised energy sector
—Storage capacity to increase 30x
—Grid scale wind & solar increase 9x
—Distributed solar PV 5x
• Digitalisation: Smart meters and digitalisation in Australia’s energy sector are on the rise

EV infrastructure:
• IPD Group has a potential $1b opportunity in the expanding EV charging infrastructure, set to grow 20x by 2030
• Australia’s EV fleet is set to grow from ~40k to 1m by 2027, increasing infrastructure demand
• IPD Group offers end-to-end EV infrastructure solutions
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