ASX:QHL
Quickstep Holdings Ltd
Investment Summary
The fund managers believe that Quickstep Holdings Ltd (QHL) presents a unique investment opportunity, highlighted by its strong contracts and operational improvements. They express concern about the initial disappointing performance following a $1.25m contract with Carbonix, but acknowledge its significance given QHL's modest $20m market capitalisation. In their opinion, the company’s expansion efforts, particularly in the US defence sector, could lead to a significant step-change for QHL. Fund managers recognize increasing share price appreciation, especially after a ‘Business Update’ that reported exceeded revenue forecasts and operational profitability. Despite recent volatility, they maintain that QHL's market valuation remains compelling in comparison to peers. With a takeover offer at $0.40 showcasing a 105% premium, fund managers are optimistic about future increased bids.
Commentary From The Managers
Cyan Investment Management
31 Dec 2024
$0.56
- Cyan Investment Management updates its investment thesis on Quickstep Holdings.
- Quickstep Holdings recently saw a significant increase in performance, up 41%.
- The company entered into a Scheme Implementation Deed with ADSAM at a value of $0.575.
- This deal is linked to Quickstep's manufacturing work for Lockheed Martin and the C-130 Hercules program.
- Quickstep's directors have approved the transaction, pending no "Superior Proposal".
- Last month, Cyan Investment Management noted the stock was trading at a similar level, leading to the decision to hold.
- The fund is anticipating the potential for a new bidder to emerge in the mix.
- Continuing positive trading results contribute to the decision to hold shares in Quickstep.
Cyan Investment Management
30 Nov 2024
$0.40
- Quickstep Holdings (QHL +84%) received a takeover offer from ASDAM at $0.40, representing a 105% premium to last sale price.
- ASDAM is the holding company for Marand, which Quickstep manufactures products for, including work for Lockheed Martin and the C-130 Hercules program.
- Quickstep has made significant progress in restructuring operations, including closure of unprofitable business lines.
- Expectations for profitability improvement in FY25 are anticipated.
- Despite the bid, Cyan Investment Management continues to hold, expecting either an increased bid or a counteroffer.
- The company is undergoing a business valuation, which is expected to unlock further stock value.
Cyan Investment Management
31 Oct 2024
$0.22
- Cyan Investment Management notes a significant performance drop for Quickstep (QHL -19%).
- Following a takeover offer in early November, there were no signs of insider trading.
- The initial evaluation of the takeover bid indicates there is substantial underlying value in Quickstep.
- Cyan Investment Management has opted to retain their shares.
- The current stock trading aligns with the existing takeover price.
Cyan Investment Management
31 Aug 2024
$0.25
- Aerospace business Quickstep (QHL -27%) saw a significant pullback despite a rise of over 120% in July.
- The decision to close down their loss-making Aircraft Maintenance (Aerospace Services) division is seen as materially good news.
- QHL's full-year results indicated revenue of $99m, exceeding previous guidance by $3m.
- Segmented results highlighted achieving underlying profitability and positive cash-flow from continuing operations.
- With a current market capitalization of ~$20m, QHL is viewed as absurdly cheap compared to similar ASX listed companies.
- While month-to-month volatility may persist, improving underlying company performance suggests a continued upward trend in share price.
Cyan Investment Management
31 July 2024
$0.38
- Cyan Investment Management has been invested in Quickstep Holdings for some time.
- Quickstep's strong points include its carbon fibre manufacturing technology and established clients like Lockheed Martin and Northrup Grumman.
- The company boasts almost $100m in revenue with a modest market capitalization of $30m.
- Recent share price movements indicate broader market appreciation for Quickstep's value proposition.
- A recent ‘Business Update’ highlighted revenue exceeding forecasts, cost savings initiatives, and record revenues from their drone production division.
- Cyan noted Quickstep's attractive relative valuation compared to other companies such as Titomic and DroneShield.
- In a LinkedIn post, Cyan highlighted Titomic's $8m revenue vs $187m market cap, and DroneShield's $70m revenue vs $1,200m market cap.
Cyan Investment Management
31 Mar 2024
$0.21
- Cyan Investment Management remains focused on the potential of Quickstep Holdings Ltd (QHL), despite recent performance concerns.
- The recent announcement of a $1.25m contract with Carbonix reflects significant growth potential for QHL given its market capitalisation of just $20m.
- This contract is expected to be fulfilled within the next three months, highlighting Quickstep's role in specialized manufacturing.
- Expansion of domestic MRO services with Jetstar is a positive indicator for operational capabilities.
- QHL is also making strides into the US market by establishing a defence manufacturing facility in Kansas, which mirrors its Australian operations.
- This US expansion could be supported by existing defence contract customers and potential funding from US state or federal government entities.
- Cyan Investment Management views this as a significant step-change that could enhance Quickstep's market position.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.