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Date : 01/03/2022

GR Engineering Services



Market Cap : $340.19 Million

Dividend Per Share : $0.16

Dividend Yield : 7.39 %


52 Week Range : $1.12 - $2.27

Share Price : $2.18

Robust outlook amid a mining boom for GNG. Add to this stellar dividends. We retain a 'Buy'

Company Analysis

GR Engineering (ASX: GNG) reported another record financial performance, this time for 1H22. It has now been a series of robust performances by the company. Their operations are supported by a mining boom with no end in sight, and all roads continue to point upwards for GNG.

In its result, GNG announced:

  • Revenue: $302.3 million,
  • EBITDA: $24.3 million,
  • PBT: $21.5 million,
  • Net Operating Cashflow: $39.7 million,
  • Cash: $93.6 million, and
  • Interim Dividend: $0.09 (fully franked).

Both revenue and EBITDA increased by 71% during HY22 compared to the corresponding period. Project execution levels were higher during HY22, with multiple project completions expected during the 2022 calendar year.

GR Engineering’s subsidiaries Upstream Production Solutions Pty Ltd and Mipac Pty Ltd provided solid contributions to the consolidated results. Cash generation remained a focus for the business, and cash at the bank on 31 December 2021 was $93.6 million (30 June 2021: $69.0 million).

Given the strong balance sheet position, GNG’s order book and pipeline of project opportunities, the Board has resolved to declare an interim fully franked dividend of $0.09 (HY21: $0.05 per share, fully franked). This represents a dividend yield of over 7.3% at current prices.

Dividends have been consistently boosted every half year since 2020, and with the performance of the firm going strong, we expect this trend to go on.

Mineral Processing Division

GR Engineering’s pipeline of near term work opportunities includes, but is not limited to, the following projects:

  • Kimberley Sands JV – Thunderbird Mineral Sands Project;
  • OZ Minerals Limited – West Musgrave Project;
  • Bellevue Gold Limited – Bellevue Gold Project;
  • EcoGraf (Australia) Limited – WA Battery Graphite Manufacturing Facility.

On 31 December 2021, GR Engineering was engaged in 28 studies across a broad range of commodities for projects in Australia, the Americas and abroad.

Oil, Gas, Energy, and Water – Upstream PS

GR Engineering’s wholly-owned subsidiary, Upstream PS, generates revenue for long term operations and maintenance services, alongside project-based design and construction work.

During HY22, revenue contributions were primarily from:

– Working with the Australian Government to maintain the Northern Endeavour FPSO (FPSO) in a non-producing state. Upstream PS continues to provide the Australian Government with operations, maintenance and project services in preparation for the disconnection and removal of the FPSO.

– Wellsite and plant maintenance work (Santos and Origin) in the Bowen and Surat Basins. During HY22, Upstream PS recently expanded its service offering to Santos Limited in the Surat Basin.

– Timor Sea operations and maintenance services, including its Darwin base of operations. On 4 January 2022, Upstream PS was awarded a new three-year contract with an option for a further two years to provide maintenance and operations support to the operator of the Blacktip Gas Field and associated production infrastructure (Eni).

– Maintenance work on assets in the Perth Basin.

– Supporting onshore clients in Victoria and South Australia for carbon sequestration, operations and maintenance services.

Process Control Systems – Mipac

In May 2021, GR Engineering successfully acquired the Mipac business, a leading global provider of controls systems engineering, automation and technology services.

Mipac enhances GR Engineering’s control systems design capabilities and expands its service offering from its broader mineral processing design and construction business. Mipac has a proven business model and long-term relationships with tier 1 and other clients requiring continuous control systems solutions for complex, business-critical operations, primarily in the mineral processing, energy and water industries.

In November 2021, Mipac was awarded a key contract with MESCO Inc., a listed Japanese conglomerate, to complete Stage 2 work on the Kyshtym Copper Electrolytic Plant. Mipac will supply in-house developed specialised monitoring technology and software solutions as part of the work.


Fundamentally, not much has changed at GNG. The company continues to do what it knows best – that is, delivering on their contracts. GR Engineering continues to build its contracted and near-term prospective pipeline of work across a diverse commodity base and increase its revenue and earnings visibility for FY23 and future years.

GNG now expects revenue for FY22 to be in the range of $580 million to $600 million. The previous revenue guidance provided had forecast revenue to be in the range of $540 million to $560 million. 

The revised guidance is based on the year-to-date results and the contracted work in hand. GR Engineering’s strong balance sheet means that it is well capitalised to deliver its pipeline of work.

Our earlier report on GNG can be viewed by clicking here.


GNG is a top-quality company that has been performing extremely well since mid-2020. The company has delivered in every earnings report so far, and its dividends have consistently grown during this time. They have a strong pipeline for 2022, and given the industry tailwinds amid a mining boom that we are a part of, GNG has a lot of potential for further growth. We retain our “Buy” recommendation.

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