Broker: Maybank Research Pte Ltd
Date of Report: July 24, 2025

Civmec Ltd Secures Massive Contract Wins and Eyes Recovery: A Comprehensive Financial and ESG Analysis

Introduction: Civmec’s Strategic Leap Forward

Civmec Ltd, a leading Australian construction and engineering services provider, has recently secured new contracts and extensions worth over AUD600 million, significantly bolstering its order book. The company’s latest achievements, including the acquisition of Luerssen Australia and critical roles in major projects for Rio Tinto and Fortescue, have positioned Civmec for robust medium-term growth. Maybank Research Pte Ltd has upgraded Civmec to a BUY with a raised target price of SGD1.05, reflecting a positive outlook for FY26 and beyond.

Major Contract Wins and Strategic Project Engagements

• Major Contract Value: Civmec announced successful procurement of new contracts and extensions exceeding AUD600 million, enhancing visibility and reinforcing its market presence across key sectors.
• SEA1180 Program & Luerssen Australia Acquisition: The integration of Luerssen Australia, finalized in July 2025, cements Civmec’s status as a sovereign Australian shipbuilder, enabling direct program delivery and operational control in the maritime defence sector.
• Key Industrial Projects:
  • Rio Tinto: Civmec secured a significant package at Cape Lambert Port A facility.
  • Fortescue: The company is responsible for civil works and SMPE&I installation at the Christmas Creek Green Iron Project.
• Infrastructure Initiative: Civmec, as part of a consortium with Seymour Whyte and Aurecon, is the preferred bidder for the planning and design phase of the Perth Sporting and Entertainment Precinct Project. Only the planning and design contract value has been recognized so far, with full delivery potential commencing in early 2026.

Luerssen Australia Acquisition: A Game Changer

• Strategic Significance: Full ownership of Luerssen Australia grants Civmec direct control over the SEA1180 Offshore Patrol Vessel (OPV) program, enhancing end-to-end naval shipbuilding capabilities and operational efficiencies.
• Future Opportunities: The acquisition is expected to unlock accelerated delivery schedules, production efficiencies, and opportunities for future shipbuilding contracts.

Financial Performance: A Snapshot and Outlook

• Q4 FY25 Earnings: Civmec is forecast to report a net profit of AUD8 million for Q4FY25 (down 48% YoY, flat QoQ) due to project award timing delays. However, the outlook is positive, with the order book expected to rebound above AUD1 billion, setting the stage for revenue and earnings recovery.

Share Price and Market Statistics

• Share Price (as of report): SGD0.94
• 12-month Price Target: SGD1.05 (+12%)
• Previous Target: SGD0.89
• Market Capitalisation: SGD469.4 million (USD367 million)
• Issued Shares: 502 million
• 52-week High/Low: SGD1.16 / SGD0.70
• Major Shareholders:
  • Fitzgerald Family Trust: 19.5%
  • Patrick John Tallon: 19.5%
  • Michael Lorrain Vaz: 3.0%

Key Financial Highlights (FY23A–FY27E)

Peer Benchmarking: Civmec’s Competitive Position

Peer Group Averages: P/E 38.8 (FY24), 22.0 (FY25), 19.1 (FY26); EV/EBITDA 18.2 (FY26); P/B 1.7; ROE 14.2%

Business Model, Value Proposition, and Financial Drivers

• Integrated Services: Civmec provides multidisciplinary construction and engineering solutions across oil & gas, metals, minerals, infrastructure, marine, and defence.
• Blue-Chip Clients: Major clients include Chevron, Rio Tinto, Alcoa Australia, BHP, Thyssenkrupp, and the Royal Australian Navy.
• Order Book Strength: The company boasts a healthy order book of approximately AUD853 million, supporting revenue visibility for the next 12 months and beyond.
• Recurring Revenue: Maintenance contracts contribute 15–20% of FY24 revenue, supporting ongoing cash flow.
• Margin Expansion Potential: EBITDA margin (FY24: 11.7%) is expected to improve through enhanced utilization and economies of scale.
• Strong Balance Sheet: Net cash position of AUD24.5 million in FY24, driven by robust operating cash flow.
• Growth Catalysts: Key drivers include stronger-than-expected order wins, margin improvements, and potential for higher dividend payouts.
• Risks: Slower contract wins, rising input costs, and project execution missteps represent core downside risks.

Comprehensive ESG Evaluation: Performance, Strategies, and Targets

• ESG Score: Civmec has an overall ESG score of 52, slightly above average, reflecting clear frameworks and internal policies, but room for improvement in qualitative aspects.
• Environmental Initiatives:
  • Transition to electric-powered forklifts at the Henderson facility.
  • Increased solar panel deployment and garnet recycling in paint/blast sheds to reduce waste and energy intensity.
  • Achieved 76% recycling participation rate in FY23, exceeding the 70% target.
  • Zero cases of environmental incidents or prosecutions.
• Social Performance:
  • Nearly 50% female representation at head office, though less than 10% across the entire workforce and 11% in management roles.
  • Lost Time Injury Frequency Rate at 0.4 per 1 million hours worked in FY23.
  • Active apprenticeship, traineeship, and undergraduate programs for staff development.
  • No reported incidents of discrimination or anti-competitive behavior.
• Governance:
  • Board consists of six directors, all male, with four independent non-executive directors and committees chaired by independents.
  • Executive Chairman and CEO collectively own approximately 39% of the company.
  • Board/management compensation remains modest relative to total employee compensation.
  • External auditor: Moore Stephens LLP.
• Key ESG Targets Achieved:
  • Reduced energy intensity to 0.16 TJ/AUDm (target: 0.17)
  • Reduced emissions intensity to 21.9 tCO2e/AUDm (target: 25.0)
  • Zero environmental incidents and prosecutions

Detailed Financials: Income Statement, Balance Sheet, and Key Ratios (FY23A–FY27E)

Conclusion: A Resilient Growth Story with ESG Commitment

Civmec Ltd’s strong order book, major contract wins, and strategic acquisition of Luerssen Australia underpin its positive medium-term outlook. With a robust financial position, improving project pipeline, and clear ESG progress, Civmec stands out as a value pick in the construction and engineering sector. Maybank Research’s upgrade to BUY and raised target price reflect confidence in Civmec’s recovery and growth trajectory, making it a stock to watch for investors seeking robust exposure to Australia’s infrastructure, resources, marine, and defence markets.