Fund Manager Summary
The fund managers believe that the outlook for Saunders International Ltd remains positive despite recent challenges. In their opinion, the termination of the $165 million contract by Crowley, while initially perceived negatively, indicates that the issues were not related to SND’s performance, reflecting a balanced approach to contracting. They note that the acquisition of Automation IT for $5.50 million enhances SND’s capacity to pursue larger tenders in the energy and automation sectors, positioning the company for growth. Furthermore, the successful tender for the $42 million BP Kwinana Renewables Project is expected to offset losses from the terminated contract and bolster SND's reputation in the renewable fuels market. Overall, the fund managers view these developments as strategic moves that will support SND’s profitability moving forward.
Source: Trading View
Commentary From The Managers
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Naos Asset Management
30 Sept 2025
$0.81
Summary
- Naos Asset Management highlights the acquisition of Aqua Metro for up to $30 million as a pivotal move for SND.
- The acquisition is projected to contribute approximately $135 million in revenue and $11 million in EBITDA for FY26, surpassing SND's total EBITDA for FY25.
- Broader Revenue Diversification: The deal diversifies SND's revenue, reducing reliance on liquid fuel storage and processing, with water-related clients expected to contribute over 40% of group revenue.
- Complementary to Core Offering: The synergy between SND and Aqua Metro enhances their service portfolio, positioning them for larger contracts and increased market share.
- Rising Capex on Water Infrastructure: Australia’s aging water infrastructure requires significant investment, with national spending nearing $9 billion annually.
- Geographic Expansion Opportunities: Aqua Metro aims to expand into NSW and QLD, leveraging SND’s established presence in these regions.
- Naos notes the appointment of Angelo De Angelis as the new MD & CEO, viewing it as a strategic move for growth and integration of Aqua Metro.
- Additionally, Andrew Bellamy joins the Board, bringing valuable experience from Austal Ltd, enhancing SND's capabilities in securing sophisticated projects.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Naos Asset Management
30 Sept 2025
$0.81
- Naos Asset Management highlights the acquisition of Aqua Metro for up to $30 million as a pivotal move for SND.
- The acquisition is projected to contribute approximately $135 million in revenue and $11 million in EBITDA for FY26, surpassing SND's total EBITDA for FY25.
- Broader Revenue Diversification: The deal diversifies SND's revenue, reducing reliance on liquid fuel storage and processing, with water-related clients expected to contribute over 40% of group revenue.
- Complementary to Core Offering: The synergy between SND and Aqua Metro enhances their service portfolio, positioning them for larger contracts and increased market share.
- Rising Capex on Water Infrastructure: Australia’s aging water infrastructure requires significant investment, with national spending nearing $9 billion annually.
- Geographic Expansion Opportunities: Aqua Metro aims to expand into NSW and QLD, leveraging SND’s established presence in these regions.
- Naos notes the appointment of Angelo De Angelis as the new MD & CEO, viewing it as a strategic move for growth and integration of Aqua Metro.
- Additionally, Andrew Bellamy joins the Board, bringing valuable experience from Austal Ltd, enhancing SND's capabilities in securing sophisticated projects.
Summary
Naos Asset Management
30 June 2025
$0.74
- Naos Asset Management continues to hold Saunders International Ltd (ASX: SND) as a core investment in their portfolio.
- SND has significantly expanded its workforce from ~50 to ~500 employees and increased revenue from ~$50 million to over $200 million.
- The company's strategy focuses on securing high-value contracts as a self-performing contractor, leveraging in-house expertise.
- Key clients include the Department of Defence, tier-1 resource companies, and utilities like Sydney Water.
- Notable project successes include contracts exceeding $40 million at Western Sydney Airport and RAAF Base Tindal.
- In FY25, earnings downgrades occurred due to project timing uncertainties influenced by a federal election, budget shifts, and volatile commodity prices.
- The resignation of SND’s CEO adds to the challenges faced by the company in balancing long-term growth with short-term performance.
- Despite increased fixed costs from long-term investments, SND has demonstrated consistent year-on-year EPS growth.
- SND aims to exceed $350 million in revenue within 2-3 years, with over $1.5 billion in tenders currently under evaluation.
- Comparable firms indicate that reaching a scale inflection point can create substantial shareholder value in capital-light contracting businesses.
- In July 2025, SND announced the acquisition of Aqua Metro, enhancing their capabilities in addressing ageing water infrastructure.
- The acquisition aligns with SND’s strategic goals, adding scale with Aqua Metro’s annual revenue exceeding $100 million.
- Naos Asset Management anticipates discussing potential synergies from the Aqua Metro acquisition in the upcoming Q1 FY26 Quarterly Investment Report.
- Clarity is sought on SND’s project pipeline, particularly regarding delays in defence and resource-related projects.
Summary
Naos Asset Management
31 Mar 2025
$0.86
- Half Year Results: SND released a strong HY25 result, achieving record revenue, EBIT, and NPAT.
- Decline in Margins: Despite growth, EPS and EBIT margins fell YoY due to increased costs and share issuance for acquisitions.
- Downgraded Guidance: FY25 guidance downgraded, with revenue expectations adjusted between -5% & +5%, and EBITDA down approximately -20% due to a higher cost base.
- Record Pipeline: The business pipeline now stands at $2.3 billion, with approximately $1.2 billion in tendered work.
- Industry Diversification: Four segments, including Water and Defence, are crucial for SND’s growth potential.
- Contract Delays: Delays have impacted FY25 guidance; however, management remains optimistic about future growth.
- Defence Contracts: Expectation for SND to secure major Defence contracts given past investments; urgency to demonstrate progress.
- Market Trends: Consistent themes of delays across the contracting sector, influenced by commodity price volatility and inflation.
Summary
Naos Asset Management
31 Dec 2024
$1.01
- Naos Asset Management notes that SND has experienced a share price decline of ~30% over the past two years despite achieving record financial results.
- SND's market cap is around $100 million, contributing to share illiquidity and reduced interest from institutional investors.
- Recent substantial shareholder, Ahrens Group, a family-owned contracting business in South Australia, indicates potential long-term value in SND.
- Ahrens Group operates in similar sectors and has a robust financial standing, including a debt-free balance sheet and significant cash reserves.
- Ahrens has made acquisitions in related segments, which may complement SND’s operations and growth prospects.
- Naos believes the involvement of Ahrens highlights the long-term value in SND and provides options for future collaboration.
- SND reaffirmed guidance for revenue growth during their Q2 FY25 AGM, indicating ongoing positive momentum.
Summary
Naos Asset Management
31 Mar 2024
$0.93
- Naos Asset Management emphasizes the importance of maintaining perspective when analyzing results, notably for Saunders International Ltd (SND).
- There has been significant growth from $30 million in revenue and $1.4 million in EBITDA at 1H FY20 to $104 million in revenue and $9.8 million in EBITDA at 1H FY24, reflecting a CAGR of 36%.
- SND has achieved this growth without raising capital, currently having over $30 million in cash and no bank debt.
- The order book currently exceeds $220 million despite completing its largest contract worth approximately $160 million.
- SND is effectively managing its order book, burning through approximately $100 million each half.
- The outlook for SND is robust due to its self-performing model, reducing dependency on sub-contractors.
- Site visits, such as to the Nancy Bird Walton Western Sydney Airport, highlight SND's capabilities in delivering extensive infrastructure projects.
- SND's unique offerings position it well to secure large design and construction projects focused on various liquids, including water and fuels.
- While maintaining past growth rates is challenging, Naos Asset Management believes SND has the potential to double its revenue base in the next four years.
- Successful project execution and securing additional large projects with tier-1 clients will be critical for SND's future growth.
Summary
Naos Asset Management
31 Dec 2023
$0.93
- Naos Asset Management notes the acquisition of Piping Solutions (PS) by SND for an initial payment of $13 million plus earn-out, reflecting strong vendor confidence in SND's strategy.
- PS is a complementary offering that expands SND's service capabilities, enabling them to offer clients complete solutions including both tanks and piping elements.
- PS has experience with major contracts, including work for the Western Sydney Airport, aligning with SND's goal to internalize specialized skills.
- Significant exposure to Defence contracts accounts for approximately 40% of PS’ revenue, bolstering SND’s credentials in defense opportunities.
- The acquisition enhances SND's multi-year strategy to gain tendering expertise in large defense projects.
- Expansion into new energy markets, such as Hydrogen and Biofuels, is accelerated by PS's capabilities and client collaborations.
- PS strengthens SND’s position in evolving renewable energy sectors with recent partnerships and projects.
- SND continues to rebuild its order book after completing significant projects, moving from a tank maintenance focus to a multidisciplinary contracting business.
- Overall, Naos Asset Management continues to hold SND as it evolves to offer unique solutions directly to Tier-1 clients.
Summary
Naos Asset Management
30 Sept 2023
$0.99
- FY23 was a critical year for Saunders International Ltd (SND), characterized by a high level of execution risk due to significant business growth.
- Market scrutiny was particularly focused on SND’s handling of the $165 million Project Caymus, which was terminated in April.
- Key investor concerns included SND’s margin management, cash flow post-termination, and maintenance of the orderbook.
- SND achieved a commendable EBIT margin of 7.2%, positioning it in the top quartile relative to peers.
- Notably, the Civilbuild business generated approximately $30 million of revenue without contributing to profitability.
- Excluding Civilbuild, the overall group margin would rise to 8.50% based on delivered EBIT.
- A major point of concern was cash flow conversion, showing a reduction of roughly $24 million due to increased contract assets.
- As of October 10, 2023, SND's cash balance rose to $39 million, improved from $13 million in June.
- Despite project completions affecting the orderbook, SND saw a $7 million YOY growth in its orderbook.
- SND successfully won significant contracts, including a $44 million contract with Quantem Energy.
- The year marked a pivotal transition for SND, focusing on scaling and diversifying into new markets.
- Industry conditions remain favorable, positioning SND for potential growth in the near to medium term.
- With over 400 employees, SND has enhanced its internal capabilities significantly.
- Peer comparisons highlight Monadelphous (MND) as a successful contractor, showcasing potential pathways for SND's growth.
- SND's management is foreseen as capable of achieving substantial organic and inorganic growth opportunities.
Summary
Naos Asset Management
30 June 2023
$1.12
- Q4 FY23 Events: Update on Project Caymus, Acquisition of Automation IT & BP Bio Fuels Contract Win at Kwinana
- Notable Termination: SND was "terminated by convenience" by Crowley on a $165 million contract for fuel storage tanks in Darwin, NT
- Implications of Termination: Naos Asset Management believes this suggests issues not associated with SND or their work completed
- Order Book Impact: Despite a gap from the terminated contract, Naos Asset Management feels SND is positioned to close the contract on original terms
- Acquisition of Automation IT: SND acquired Automation IT for $5.50 million, enhancing their automation division's scale and resources
- Competitive Positioning: This acquisition enables SND to compete for larger tenders against established players like Sage Automation
- Contract Win: SND successfully tendered for the $42 million BP Kwinana Renewables Project, filling part of the gap left by Project Caymus
- Renewables Focus: The project will enhance SND's credibility in the renewable fuels space, aligning with their growth strategy
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"While the termination of a major contract might raise eyebrows, it seems to reflect a strategic pivot rather than a failure. With acquisitions enhancing capabilities and new projects on the horizon, Saunders International Ltd appears poised for a resilient rebound in a competitive landscape."
Last Updated: 30 Sept 2025
Query The Data
Frequently Asked Questions
Who is investing in Saunders International Ltd (ASX:SND)?
Fund managers including Naos Asset Management have invested in Saunders International Ltd (ASX:SND).
Why do fund managers invest in Saunders International Ltd?
Fund managers invest in Saunders International Ltd due to its strategic acquisitions and project wins that enhance profitability and market positioning. The recent acquisition of Automation IT strengthens their automation capabilities, allowing for competitive bidding on larger projects. Despite the termination of the $165 million Project Caymus contract, fund managers see this as a sign of balanced contracting practices rather than poor performance. The successful tender for the $42 million BP Kwinana Renewables Project further solidifies SND's credibility in the renewable sector, addressing gaps in their order book and positioning them for future growth.
What happened to Saunders International Ltd (ASX:SND)?
Fund managers are investing in Saunders International Ltd due to its strategic acquisition of Aqua Metro, enhancing revenue diversification and positioning the company for growth in the water infrastructure sector. This move is expected to significantly boost revenue and EBITDA, with water-related clients projected to contribute over 40% of group revenue. The acquisition complements SND's core services, enabling it to secure larger contracts and expand geographically. Leadership changes, including the appointment of a new CEO and board member with defense industry expertise, further strengthen the company's growth potential.