There is a lot to be optimistic about here if they execute well. The revival is on the right track though they have been slow off the blocks on the export opportunity for railway components (not rolling stock) they talked about in the call. The JV will take time, clearly. So I don’t see that as much of a trigger yet. It was also heartening to hear that they can increase production to up to 10K wagons even with current capacity. Next quarter’s margins should go up given the increased production/scale and input costs being under control now.
The two risks are the old ones – payment delays and possible working capital issues. Given the elections next year, that’s something one has to be cognizant about. Hopefully, they get a good CEO onboard soon too – it certainly is an overhang, not having a full-time CEO for so long.
Overall, it was quite a positive earnings update.
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