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- WestStar (WSI) believes it’s well positioned for the 2022 financial year, with $185 million worth of contracts secured
- Contracts already secured include subsidiary SIMPEC’s $145 million FMG contract and $10 million for the Avertas Energy Project in Kwinana, WA
- WSI says its future order book pipeline is at $500 million, with tendering and negotiations expected to yield more contract awards in the near future
- The company reported a cash balance of $13.1 million, a 115 per cent increase when compared to Q3. It hopes the sustained earnings will flow into FY23
- Shares ended the day in the grey to close at 2.6 cents
WestStar (WSI) believes it’s well positioned for the 2022 financial year, with $185 million worth of contracts secured.
The Australian industrial services company provides engineering, construction and mining services to the resources, energy and infrastructure sectors.
It said the current revenue awarded of $185 million is a blend of works which will be performed for more than 20 clients over a range of projects and commodities.
Leading the way in the pipeline of work opportunities, WSI’s subsidiary SIMPEC was awarded a $145 million contract for the Iron Bridge Magnetite Project, which is a joint venture between Fortescue Metals’ (FMG) subsidiary, FMG Magnetite, and Formosa Steel IB.
The contract is the company’s most significant award to date and includes construction of the wet process plant of the new magnetite mine in the Pilbara region of Western Australia, with most of the works expected to be delivered in FY22.
It’s said to provide cashflow neutrality and eliminates the need to raise additional working capital.
While the company hasn’t delivered a contract of this size previously, it believes the scope is well within its capability and experience.
It follows from the recent project announcement for a $10 million contract by EPC Contractor, Acciona, for the Avertas Energy Project in Kwinana, Western Australia.
Additionally, WestStars subsidiary, Alltype Engineering, is said to be building on new work opportunities, which are being tendered and developed.
WSI said the “rapid” growth of both subsidiaries has boosted its reputation and helped to deliver growing revenue and profitability.
With around $155 million worth of contracts awarded in the first month of FY22, WestStar said it has needed to take significant steps to provide the appropriate support to ensure the success of its delivery model.
Over the June quarter, WSI reported a cash balance of $13.18 million, marking an increase of 115 per cent on quarter three.
Moving forward, the company said its in a favourable position, with record revenues for FY22 and sustained earnings it hopes will flow into FY23.
Moreover, it reported a future order book pipeline which is said to be at $500 million, with tendering and negotiations expected to yield more contract awards in the near future.
With all projects said to be progressing well, and the company supposedly maintaining budget and remaining in accordance with program cycles, WSI said
the strength of future projected earnings will support a strengthened valuation.
Shares ended the day in the grey trading at 2.6 cents.
