Australian Stock Report - Share Tips
Transpacific Industries Group (TPI) Buy Stock
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Publish date: Fri, 12 Apr 2013, 10:01 AM
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Its clients range from small businesses to larger commercial and industrial companies. The group's core responsibilities include recycling solutions, waste management services, parts washing equipment and waste oil collections.
1H13 result
Despite a poor 1Q result, TPI's 1H13 result were solid. The group's revenue improved to $1.16 billion, a 3.8% increase on the prior corresponding period.
TPI's 1H13 NPAT of $32.3 million, was up significantly from the $7.8 million reported in 1H12. Disappointingly, underlying EBITDA did fall 3.6% over the period to $120.1 million.
The decrease in EBITDA was largely the effect of overall volumes decreasing 24%. NSW volumes, being the main culprit, were down 55% mainly due to the landfill levy differential between NSW and Queensland.
Most of the company's upside came from its Commercial Vehicles division, with revenue up 16.6% to $228.1 million.
Alleviating debt concerns
The balance sheet has been, and still is, a key source of uncertainty for TPI. The group has been trying to rectify this with a raft of cost savings and debt reduction initiatives.
To this end, TPI reduced its net interest expense by 24% from the previous half to $54.9 million. The company also reduced its operating costs by $5 million in the first half with a further $45 million targeted over the next two and half years.
Outlook
The group's first half results were solid and while the company has not provided any specific guidance for the second half, it mentioned that it expects similar conditions the first half.
The group outlined several key priorities for the remainder of the financial year:
| › | Delivering on the cost savings targets of $10 million in 2H13 |
| › | Restore returns in core businesses through debt reduction |
| › | Continue debt repayment at circa $10 million per month |
| › | Continuation of divestment program |
The company is well on its way with its cost saving efforts, with 200 management positions currently under review. If TPI can execute its priorities in this financial half, then we believe that the market will continue to push the company's share price higher.
Transpacific was issued as a share to buy to our members on March 28th, if you would like further information you can sign up for FREE share recommendations and access all our research files on not only TPI but all our current trading ideas. Simply click here and starting trading today, free for 7 days.
Transpacific Industries Group (TPI) Buy Stock is a post from: Australian Stock Report Share Tips
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