Recovering Value of Construction and Engineering May Support the Infrastructure Sector

This report is an updated version of the report published on 14 September 2023 at 3:55 PM AEST.

Company Overview

Alliance Aviation Services Limited (ASX: AQZ) is an Australia-based provider of charter, contract & allied aviation, and maintenance services. The company is engaged in rendering contract air charter services, wet-leasing services, ad-hoc air charter services, regular passenger transport services and an array of allied aviation services. GWA Group Limited (ASX: GWA) is an Australia-based supplier of building fixtures and fittings designed for households and commercial premises. The company is engaged in research, design, import, and marketing activities. The Kalkine’s Sector Report covers the Investment Summary, Sector Overview & Supporting Catalysts, Data Insights & Analysis, Financial Metrics, Financial Commentary, Risks, Outlook, Technical Analysis along with the Valuation, Target Price, and Recommendation on selected stocks.

Investment Summary

Sector Overview and Supporting Catalysts

Data Insights and Analysis

Index Performance

Key Drivers versus Key Constraints

Investment theme and stocks under discussion (AQZ, GWA)

After understanding the sector, let us now look at two companies listed on the ASX. The price potential of the companies under discussion has been analysed based on the EV/Sales valuation multiple method.

1. ASX: AQZ (Alliance Aviation Services Limited)

(Recommendation: Speculative Buy, Potential Upside: Low Double-Digit, Mcap: AUD 523.99mn)

AQZ is an Australia-based provider of charter, contract & allied aviation, and maintenance services. The company is engaged in rendering contract air charter services, wet-leasing services, ad-hoc air charter services, regular passenger transport services and an array of allied aviation services.

The stock has witnessed a surge of ~8.47% in last 3 months, and over the last 1 year, it has declined by ~3.03%. The stock has a 52-week low and 52-week high of AUD 2.640 and AUD 3.650, respectively and is currently trading above the 52-week high-low average. AQZ was last covered in a report dated ’7 August 2023’.

2. ASX: GWA (GWA Group Limited)

(Recommendation: Speculative Buy, Potential Upside: Low Double-Digit, Mcap: AUD 499.91mn)

GWA is an Australia-based supplier of building fixtures and fittings designed for households and commercial premises. The company is engaged in research, design, import, and marketing activities.

The stock has witnessed a surge of ~% in last 3 months, and over the last 1 year, it has declined by ~2.34%. The stock has a 52-week low and 52-week high of AUD 1.600 and AUD 2.260, respectively and is currently trading below the 52-week high-low average. GWA was last covered in a report dated ‘3 July 2023’.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 14 September 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual’s appetite for upside potential, risks, holding duration, and any previous holdings. An ‘Exit’ from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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