A$280m  outstanding  order book  today.  The recent order wins have overtaken the rate of  order  book  consumption,  with  the  outstanding  order  book  rising  by  A$9m  from  the A$271m  order  book  we  noted  in  our  7-Jan  note.  These  bring  the  total  contracts  won  this month  up  to  at  least  A$57m  (there  are  possibly  small  unannounced  wins),  outpacing  by 25%  the  win  rate  required  for  our  A$731m  revenue  forecast  this  year.  We  continue  to expect a good order win momentum.

ASX listing plans still going ahead. We hosted AusGroup during our Corporate Day last week,  and  management  shared  that  the  ASX  listing  plans  were  moving  along  smoothly. There  is  no  fixed  timetable,  though  we  did  sense  a  certain  impetus  supporting  this  move for  strategic  reasons  -  once  listed  on  the  ASX,  we  think  that  a  better  valuation  might  be achieved  which  may  then  make  AusGroup  shares  more  valuable  for  acquisitions, dovetailing with management's stated aim of expanding into Queensland.

Fundamentally  undervalued  even  without  ASX  listing.  While  the  success  of  the  ASX listing may be a potential catalyst, we rate AusGroup on the base-case of the SGX-listing being maintained. Even so, it is undervalued - a FY13F P/E of 7.6x vs. Civmec's FY12 P/E of 20.5x.

Our  turnaround  investment  thesis  is  maintained.  We  initiated  coverage on  AusGroup on the thesis that the turnaround had gone unnoticed by the market. While the stock has risen 51% since our Sep-12 initiation, this has not fully priced in even the FY13F recovery. We  expect  net  margin  improvements  to  continue  through  FY15F.  Also,  the  price  today does  not  incorporate  much  growth  expectations  -  unlike  Civmec  which  clearly  has  a certain level of growth already factored into the price.

Maintain Buy with TP $0.755. We continue to value AusGroup at 9x FY13F EPS for a TP of $0.755. We are expecting the 2Q13 results release within the next three weeks.

Source: OSK