SSM - Service Stream

[Ann]

That is the most ridiculous business name. Please tell me if your brain did not read "Comedian Infrastructure".

Being dyslexic I have to read things slowly tinhat, so I hadn't noticed the similarity to Comedian. Hopefully Comdain won't turn out to be a bad joke for the investors.

 

[Miner]

It was last posted by Ann in almost more than one year back.
Bell Potter is heavily advocating this one - I do have a sense they could be involved in some form as a brokerage firm. Two research reports within a week's gap interesting for sure.
Current price slightly under $2.8 and they are recommending $3.15
Some extracts are attached.
DNH

 

[Trav.]

@Miner I just had a quick look at the weekly chart and definitely one for the watchlist as I can see SSM trying to hold a break of $2.80 which it tested a couple of times recently and if this can happen then $3 (ATH $3.06) will be significant which is ~ +7%

Below is a weekly chart showing a symmetrical triangle and could break either way hence the watchlist but momentum appears to be in favour on the weekly chart.

 

[Miner]

@Miner I just had a quick look at the weekly chart and definitely one for the watchlist as I can see SSM trying to hold a break of $2.80 which it tested a couple of times recently and if this can happen then $3 (ATH $3.06) will be significant which is ~ +7%

Below is a weekly chart showing a symmetrical triangle and could break either way hence the watchlist but momentum appears to be in favour on the weekly chart.

View attachment 99916

Thanks @Trav.

 

[galumay]

The question with SSM is really how you see the NBN contracts playing out in the mid to long term. I haven't really looked into it because its never been a business I wanted to own. (my company has contracts with SSM and the experience colours my perception of the business.)

 

[Dona Ferentes]

Livewire Markets: Next stop: Service Stream Management. Came out in May, reaffirmed that they'll generate record operating EBITDA and have committed to paying ongoing dividends. Buy, hold, sell?

Simon Conn (Investors Mutual): I think it's a hold. It's an okay business, but I'm always a bit wary of contractors, particularly, with a concentrated customer base. Your margins are a product of what your customers can tell you. Look, they've made good money over the NBN rollout, but we're now migrating to a different phase of the NBN. So look, it's a good management team, balance sheet's okay, but for a contractor, 15 times is about as much as you want to pay. So it's at a hold to a sell.

Livewire Markets: Dean, SSM is on a 12 times PE ratio, circa 5 per cent fully franked to yield. Share price has come off a bit, screaming bargain or Pandora's box? Buy, hold, sell?

Dean Fremder (Perpetual): It's a buy for us. It's a super-boring business, but we love that. Ultimately, it doesn't matter whether the economy is booming or in recession, if Sydney Water, one of their pipes leaks, they're going to get it fixed. So very resilient through what could be a tough economic environment ahead. To us, it's cheap. It's got a very good balance sheet – it's net cash of 5 per cent fully franked yield roughly. Sensible management team with a good track record, and they'll buy some things to bolt onto their business, which we think it would be really attractive. So buy for us.

 

[galumay]

Potentially big changes coming for Service Stream, they may lose their NBN contracts in September. I haven't looked at what % of their business NBN contracts are, but I imagine they are significant.

 

[bohn]

Service Stream secures multi‐year (4+2+2) Unified Field Operations (Networks) Agreement with NBN

 

[galumay]

Interesting, so they lost Western Australia, South Australia and the Northern Territory. Thats a fair chunk of the NBN work gone. Looks like the contract is now split between Service Stream & Downers.

 

[peter2]

OK lets have a look at the chart of SSM (after reading comments in the DOW thread).

SSM is looking very bullish and likely to go higher. The huge volume up bar (23/9/20) was not accompanied with any news. Interesting.
It's a tricky stock to trade short term because of the thin MD and many opening gaps. SSM looks a promising medium term trade.

Regarding the UFO agreement with the NBN, SSM has regional Vic, NSW, Qld and ACT to keep them busy.

 

[galumay]

The NBN work is small though, its not what we call A&A (activations & assurances), its network maintenance and build out which is much smaller.

As a long term investor, the question that would worry me is what will SSM be doing in 5 or 10 years time?

Peter2, in your position as a trader, there may be plenty of opportunity in the mean time!

 

[Boggo]

OK lets have a look at the chart of SSM (after reading comments in the DOW thread).

SSM is looking very bullish and likely to go higher. The huge volume up bar (23/9/20) was not accompanied with any news. Interesting.
It's a tricky stock to trade short term because of the thin MD and many opening gaps. SSM looks a promising medium term trade.

Regarding the UFO agreement with the NBN, SSM has regional Vic, NSW, Qld and ACT to keep them busy.

Nice pickup back then @peter2.
It took a while longer for my weekly to pick it up. Target area now around $2.80 or is it going to get flogged on the current news ?

(click to expand)

 

[Boggo]

Well, looks like getting flogged was the answer !

 

[peter2]

Another good example of the "yikes" bar. The bane of short term traders.

Perhaps when @galumay recovers he'll explain why the latest news is bad. Is it low margin work?

 

[peter2]

@Boggo Did we have the wrong interpretation on the SSM swings. Could they have been corrective, portended the current swing down ?
Could your 1,2 be a,b ?

 

[Boggo]

@Boggo Did we have the wrong interpretation on the SSM swings. Could they have been corrective, portended the current swing down ?
Could your 1,2 be a,b ?

Looks that way @peter2.
It fits both options but after that large downward correction I tend to look for an upward resumption hence the hopeful 1,2,3.
(RWC is a somewhat similiar example of this on the weekly atm)

Had this signal appeared on my Amibroker scan on Friday I would have been in on Monday. Running it during the week creates a few to keep an eye on towards the weekend.

(click to expand)

 

[galumay]

Perhaps when @galumay recovers he'll explain why the latest news is bad. Is it low margin work?

What am I recovering from?! This is the contract that continues work SSM already had with NBN, but was out of contract for some time. (the old OMMA contract). I dont know the terms, but I am guessing NBN has tried to screw the margins down like they did with the earlier Network contract that Downer's won. No doubt SSM will pass the screwing onto the sub-contractors like me!!

The announcement was positive for SSM as they had been operating with no certainty given that the OMMA contract had expired, also the Activations & Assurances contract is a lot more work than the Network contract. So not sure why the price would drop.

Looks like pretty good buying in the current market, if it were a business you wanted to own.

 

[Faramir]

This is my fourth company I am picking for Tipping Comp 2021.
I actually know nothing about Service Stream. I wrote SSM on a scrap piece of paper on my desk and it has been sitting here for nearly 18 months. I have no idea why I wrote "SSM". Now I can make this piece of paper useful by using it for a tipping comp. Back in Aug 2019, Arden Jennings wrote an article:

Service Stream: Move over NBN, Comdain has arrived

Service Stream (SSM) has developed into a core small-cap industrial poised to capitalise on servicing Australia’s essential networks including electricity, gas, telco and water. SSM has delivered a solid FY19 result, maintaining its enviable track record of execution with the second half of...

www.livewiremarkets.com

I don't think I read this article properly.

Is this the announcement that caused the shock this month:

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02322986-3A558175?access_token=83ff96335c2d45a094df02a206a39ff4

Here is a chart:

Great stock for tipping, would I ever put any funds into this stock? No. I don't ever know why I said No but that's a good enough reason to say no.

 

[galumay]

Is this the announcement that caused the shock this month:

It shouldn't have caused any shock, other than negative, its the new contract that replaces the expired OMMA contract for what we call A&A - activations & assurances, SSM lost several states they previously held under OMMA. I guess you could say it was positive because they didn't lose the complete contract (something they believed was a real possibility.)

 

[Dona Ferentes]

Lendlease’s services arm is a maintenance and asset management contractor that looks after airports, roads, wind farms and the like. The unit has been earmarked for sale for the past two years.

Likely buyers are UGL, owned by CIMIC, and Monadelphous, both believed to be working through the data room documents with an eye to submitting offers, while fellow listed player Service Stream and France’s Egis are also in the mix. Downer Group and Ventia, also owned by CIMIC, have dropped out of the process. Private equity is not thought to be involved.