Small Cap Favourites: Fleetwood Corporation Limited
We’ve been focusing on Australian mining services businesses which we said last week are in the pits and probably among the most unloved asset classes in the developed world. For good reason, the amount of shareholder value that has been destroyed during this downturn is unimaginable by developed market standards. The downturn has hit so hard that many of these businesses are being priced for collapse. Fleetwood is no different.
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FWD knows the glory days of being a mining and energy accommodation provider is over, so it’s working on reinventing itself. In a recent ASX announced, the company said “…as part of Fleetwood’s strategy to significantly increase its presence in the Australian affordable housing sector the company has, over the last eighteen months, been working to establish supply agreements with owners and developers of manufactured housing estates (“MHE’s”)…”
Late last month, FWD said a number of supply agreements have resulted from the strategy and Fleetwood is pleased to announce that it has now executed an exclusive supply agreement with National Lifestyle Villages (“NLV”). NLV has nine active MHE’s and a further three awaiting approval, representing 1,525 sites available for new homes. Under the terms of the agreement, Fleetwood will manufacture homes at its High Wycombe facility in Perth and install homes in NLV villages. The agreement has an initial term of five years and includes an option for NLV to extend the agreement for a further five years.
We’ll keep a close eye to see if this diversification strategy turns into anything meaningful. Marketcap is reasonable at $120m as of the time of writing.
Invast is very well placed to bring you some huge opportunities in the coming months. Execution costs for ASX stocks are 0.06% (6 basis points), which means for a trade with a notional exposure of AUD $10,000, the applicable commission is only AUD $6.00.
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Chief Market Analyst
Peter Esho is a member of Invast’s Investment Committee and Chief Market Analyst at Invast Financial Services in Australia. The Invast’s Investment Committee constructs professionally constructed global thematic portfolios of Direct Market Access (DMA) CFDs over highly liquid global shares and ETFs through its new PortfolioInvestor platform. Since 1960, the Invast Group has grown to become one of the largest and most successful global brokerage firms, offering state-of-the-art trading technology and unparalleled service catering to all levels of traders.
Invast Financial Services Pty Ltd (ABN 48 162 400 035) is regulated by the Australian Securities and Investments Commission and holds an AFS Licence 438283 which authorises it to carry on a financial services business in Australia.