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TWP tops rival's market cap
David McKay
Posted: Tue, 18 Dec 2007
[miningmx.com] -- AHEAD OF A POTENTIAL ten to 15 new mining listings next year in Johannesburg, it’s perhaps gratifying for the JSE’s new business team that there’s proof it’s better to list locally, sometimes at least.
Engineering and consulting firm, TWP Holdings, listed on the JSE on November 27 and has since seen its share price up by more than a third. The firm is now worth about R2.25bn which is slightly more than Bateman Engineering which listed on London’s AIM but has a lower rating. It’s market capitalisation is about R2.13bn.
TWP’s basic proposition is to capitalise on the project spend, principally African and Australian capital intensive projects. It’s a direct play on the health of the commodity market and metal prices.
Says one Johannesburg analyst: “There’s literally scores of people wanting to put cash into African projects. This mining market is going to
carry on for another 10 years.”
In truth, the comparison between Bateman and TWP is not completely fair because although both occupy the mining project space, they have quite different approaches. Bateman has a heftier revenue line because it undertakes large, turnkey projects; TWP will take on process engineering without the burden of the whole project.
As a result, TWP has slightly thicker
margins than Bateman. Says Nigel Townshend, CEO of TWP Holdings: “Our margin after tax in the first six months of our financial year is about 15%.” Bateman’s margin is often in single digits.
Townshend raises the prospect of a dual listing, however, probably in Australia rather than AIM. In the meantime, the company is trying to grow quick enough to take on the extra work.
“We’re turning work down at the moment,” says Townshend. “But we’re hiring about 40 to 60 people per month to cope with the volume.” Acquiring skills in the current mining market has been identified as one of the key challenges for metal supply growth, but Townshend says the challenge is do-able.
“It’s a challenge but we’re at the top of the food chain as we only employ high-end technical professionals,” he says.
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