Next Investors logo grey

Diversification the key to WestStar’s success


Published 01-APR-2019 10:03 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Last week’s award of a $2.7 million contract to provide prefabricated concrete for a Western Australian high-rise project was one of a number of notches in the belt for WestStar Industrial Ltd (ASX:WSI), an industrial services with a unique range of capabilities.

The company’s three specialist operating businesses, Precast Australia Pty Ltd (concrete fabrication) SIMPEC Pty Ltd (construction contractor) and Distinct Developments (property developer) have been successful in winning new work across a broad range of sectors throughout fiscal 2019.

There appears to have been an acceleration in its contract success over the last three months, having won work in relation to both essential infrastructure and mining projects.

It is this degree of diversification that distinguishes the company from basic mining contractors working in narrow fields where the competition is intense, usually resulting in difficulties in winning work or having to bid for contracts that offer low margins.

$33 million in contracts and strong tender pipeline

The latest contracts which relate to the construction of the new Arthouse Apartments building in Joondalup and the supply of precast concrete for the University of Western Australia follow-on from other key infrastructure projects in Western Australia such as the Forrestfield Airport Rail Link, the Thompson Bay boardwalk at Rottnest Island and the Swan River pedestrian bridge.

WestStar has a strong pipeline of infrastructure projects.

While the Western Australian construction industry has been through a lull, management said that the precast market is showing signs of improvement with activity and award levels picking up significantly.

With these awards, WestStar has accumulated contracts totalling approximately $33 million for the nine months to March 31, 2019.

Given the market is improving, management said that the outlook for the Precast business is very positive.

Both Precast and WestStar’s other operating business SIMPEC Pty Ltd have been very active in tendering, particularly in the last quarter.

Outcomes from these tenders have the potential to maintain recent strong momentum in the company’s share price which doubled from 1.3 cents in December 2018 to hit a 12 month high of 2.6 cents in late February.

Last Friday’s closing price of 2.2 cents isn’t far off its 12 month high, and the result of upcoming tenders could be the clincher in terms of seeing it make another high before the financial year closes.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.