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AAL - Alfabs Australia

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Alfabs is a market‑leading, diversified group of companies that primarily operates across two divisions in Australia – Mining and Engineering.

The Mining division primarily sells to national and internationally owned black coal mines in Australia.
  • Equipment hire: Providing equipment hire to operators in the underground black coal mining industry in Australia.
  • Mining consumables: Supplying mining consumables and spare parts to mining operators.
  • Workshop capability: Providing repair, maintenance, overhaul and construction of underground mining equipment.
The Engineering division primarily sells to Tier 1 and Tier 2 contractors for public and private infrastructure projects.
  • Engineering Fabrication: Fabrication of heavy structural steel for public and private infrastructure projects in Australia.
  • Engineering Services: Site based installation and pre‑assembly works supporting the fabrication business unit.
  • Protective coatings: Provides abrasive blasting and protective coatings for clients and internal projects.
  • Forklift and Access: Hire of forklifts, elevated work platforms (EWPs) and materials handling equipment.
  • Logistics: Australia wide transport and logistics services.
  • Labour Hire: Provision of personnel for engineering and site‑based maintenance and upgrade projects.
It is anticipated that AAL will list on the ASX on 28 June 2024.

Alfabs Group | Engineering Services in the Hunter Valley Region

The Alfabs Group provides comprehensive mining & engineering services across the Hunter Valley region, Queensland & Australia-wide. Call 1300 253 227.
alfabs.com.au alfabs.com.au
 
Listing date28 June 2024 ; 11:00 AM AEST ##
Company contact detailshttps://alfabs.com.au/
Ph: 1300 253 227
Principal ActivitiesUnderground mining equipment hire and engineering
Issue PriceAUD 0.25
Issue TypeOrdinary Fully Paid Shares
Security codeAAL
Capital to be Raised$18,000,000
Expected offer close date20 June 2024
UnderwriterNot underwritten. Blue Ocean Equities Pty Ltd (Lead Manager).
 
Listing on the 28/06/2024 IPO @ $0.25

www.afr.com

Equipment hire biz Alfabs Australia seeks $70m listing

Bell Potter Securities and Blue Ocean Equities were tapped as joint lead managers on the deal.
www.afr.com www.afr.com

Expected market capitalization between $69.7m and $71.7m

1719307240497.png
 
Company beat all it's forecast included in there prospectus:

1726478709915.png



I always find companies like this interesting, they give insight into whats going on in the mining industry. Interestingly they note several new coal mines have opened and there is strong demand for there underground equipment.

Additionally they appear to be at the forefront of mine safety.

1726478797014.png



Company is expecting to pay >50% of Net Profit After Tax as dividends.

Added to the watch list. The low volume is my primary concern.
 
As I have been a advocate of this stock, ill give more of my rationale/thinking;

  • Company is focused on paying down debt and becoming debt free.
    • "We are aggressively repaying debt while growing working capital in a disciplined and structured manner. This focus on balance sheet strength is crucial as we position ourselves to capitalize on future opportunities. As we work towards becoming a net debt-free company, our financial resilience will be a key asset as we move forward.", Matthew Torrance (CEO) Annual Report
  • Company is focused on bolt-on-acquisitions that fit with there existing business model, not trying to break into new and expensive industries; "FY25 and beyond our focus remains clear: we are committed to delivering on the growth strategy we have laid out with key growth pillars of new contracts, new mining equipment, refurbishments and bolt-on acquisitions", Matthew Torrance (CEO) Annual Report
  • Hire industry regarding Coal Mining, I cant imagine many new emerging mines would be wanting to purchase expensive mining equipment outright especially with the narrative around the long term viability of coal mining (seems like risk most wouldn't want).
  • Coal Mining is going to be a continued requirement globally as the AI Revolution takes place. Currently renewable is not reliable enough for the energy requirements needed for data centers.
I believe we will see a resurgence in coal demand globally for the next 2 - 5 years to meet the energy stability required for the advanced data centers globally. Nuclear will eventually overtake it in my opinion, however a Nuclear Power Plant takes on average 11 - 12 years to build, and I imagine money poorer nations will look at the opportunity cost of building a coal fired power plant or investing billions into nucelar...

Alfabs is well positioned to sell the "shovels" to the miners.


1728777131118.png
 
Reminds me a bit of Emeco (EHL) in which I have a small holding; particularly the part about the purchase of second hand mining equipment and overhauling it to add to its hire fleet. Don't think EHL has exposure to coal mining though, or certainly not a focus. Emeco has a long unsuccessful history on the share market.

AAL Not Held
 
Closed +16.07% on no news.

Not insignificant volume either considering the $37m market cap. Will be interested to see if it holds or if we see a sell side return
 
I really can't work out the stimulus for this going up, outside of some microcap funds featuring it in there webinar (very briefly).

I guess because of how small it is there isn't much sell side attention and this has just retreated? There has been reasonable volume as well given how small its market cap is and the low number of shares on issue.

Anyone got any other ideas? Im not complaining about the upside, just know idea what the catalyst was.
 
BossMan. said:
I really can't work out the stimulus for this going up, outside of some microcap funds featuring it in there webinar (very briefly).

I guess because of how small it is there isn't much sell side attention and this has just retreated? There has been reasonable volume as well given how small its market cap is and the low number of shares on issue.

Anyone got any other ideas? Im not complaining about the upside, just know idea what the catalyst was.
Click to expand...
My guess its just a sector thing. Mining and mining services the micro-caps are trading at historically depressed levels vs the larger cap companies there is a huge divergence to what is considered normal historically and as the bull market heats up resource exploration companies, junior gold stocks, junior mining services companies, etc are starting to attract attention.
 
Strange, I have not looked at it before, but it looks like a lower quality mining services business, there are some really good companies in this sector, unloved and over looked, but great metrics. This is not one of them!
 
I'm not complaining, but this keeps to run up on no news, and reasonable volume given the low market cap.

1731312575616.png


Is it just that there are no sellers? Or is it being accumulated by micro-cap funds or is there something more sinister going on?

1731312662286.png



Up 38% in the last 6 months.
 
galumay said:
Strange, I have not looked at it before, but it looks like a lower quality mining services business, there are some really good companies in this sector, unloved and over looked, but great metrics. This is not one of them!
Click to expand...
A few interesting things which may be relevant.
1. only 120.6 mil shares on issue
2. Tightly held
aal shareholders.jpg

3. A couple of funds in the list;
4. Founder led business makes it extractive to funds, probably 2 are on the register;
5. Their specialty is coal mines.

I see it as a breakout today.
 
Set to Strong Buy by Bell Potter and a price target of $0.40

(no surprise given they were a part of the IPO)

Thought it was worth adding to your post Country Lad, the top 20 own 80.1%

1732005698661.png
 
Tightly held and directors accumulating additional shares.

A lot of them. Hence my selection for December, have a feeling we will see a better then expected quarterly in the coming months.
 
Country Lad said:
A few interesting things which may be relevant.
1. only 120.6 mil shares on issue
2. Tightly held
View attachment 187712
3. A couple of funds in the list;
4. Founder led business makes it extractive to funds, probably 2 are on the register;
5. Their specialty is coal mines.

I see it as a breakout today.
Click to expand...

( IMHO ) Salter and Moelis are not ( edit )the worst fund managers to have as majors

hires machines/plant to coal miners ... i suppose the question is which ones ?

i see a mention earlier in the thread that they buy second hand assets and refurb and/or upgrade them before rehiring ,

hmmm that implies either shorter term leases until the new plant can arrive , or shoe-string budget miners , or stop-gap plant until repairs can be completed .

i am NOT against founder-led businesses ( to invest in ) but that model does have it's own risks ( gets treated like a family empire , or worse an extra wallet to tap at stressful moments)

the other risk .. is the ten 10 shareholders can gang up , and take this to an unlisted ( or private ) company limiting retail investors options ( sitting on the pavement with a handful of cash , or with shares you can't easily sell/buy

( i hold EHL )

maybe i should add this to my watch-list ( if cheap enough and viable enough , i can cope with an unlisted holding , i have two or three already )
 

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