WestStar Industrial Limited

Income statement

Sources: FY2022–FY2025 from S&P Global Market Intelligence via StockAnalysis and company Appendix 4E/Annual Reports. The company's NPAT figures agree: FY2023 A$1,758,966; FY2024 A$3,293,761; FY2025 A$(3,414,951). FY2026 revenue (A$192.47m) from S&P via StockAnalysis. FY2026 gross profit (A$22.80m) and NPAT (A$3.81m) from S&P-derived data via TipRanks; PitchBook reports FY2026 net income of US$2.58m, which is consistent. FY2026 operating income, EBITDA and pre-tax income were not available in the sources reviewed. FY2026 EPS of ~A$0.03 is derived (A$3.81m ÷ 128.77m shares = 2.96c); TipRanks separately reports a "last earnings report" EPS of A$0.026, which may reflect a different share basis.

Data conflicts flagged:

Gross profit: FY2022 is A$20.14m (S&P) vs A$20.90m (Kalkine/TradingView) vs A$18.19m (TipRanks). FY2023 is A$19.41m (S&P) vs A$20.38m (Kalkine) vs A$16.82m (TipRanks). The differences reflect varying classification of direct overheads. S&P values are used.

EBITDA: The company's FY2025 Annual Report shows EBITDA of A$507,045 and FY2024 EBITDA of A$8,236,458. Aggregators show A$(3.14)m and A$7.72m. The company figure appears to exclude share-based payments (A$1.26m in FY2025) and other items. Both are shown above.

FY2021 net income: S&P shows A$0.84m; Kalkine shows A$(0.04)m.

Margins (%)

Sources: S&P via StockAnalysis for FY2022–FY2025; FY2026 derived from revenue A$192.47m, gross profit A$22.80m and NPAT A$3.81m.

Balance sheet: notes and sources

Sources: S&P Global Market Intelligence via StockAnalysis (updated 30 Sep 2026 from the FY2026 Annual Report). Debt consists almost entirely of lease liabilities; no bank borrowings are shown after FY2022 (A$0.07m). Goodwill comprises SIMPEC A$992,198 and Alltype A$3,515,918; Watmar intangibles were A$1,073,401 at 30 Jun 2025 (Appendix 4E FY2025). Company-reported net assets at 30 Jun 2025: A$27.8m (Appendix 4E FY2025). NTA per share: 14.19c (HY Dec 2024) and 14.77c (HY Dec 2025) per Appendix 4D. These figures are on the company's basis, which appears to deduct right-of-use assets, so they differ from the S&P tangible book figure.

Cash flow: notes and sources

Sources: S&P via StockAnalysis for FY2022–FY2025. The FY2026 net change in cash is derived from the balance sheet (A$7.16m → A$24.05m). The FY2026 cash flow statement detail was not available in the sources reviewed. TipRanks' FY2026 analysis describes a decisive swing to positive operating and free cash flow. Inferred: no equity was raised for cash in FY2026 and capex appears modest, so most of the A$16.9m cash increase came from operations. It was heavily assisted by the A$20m increase in contract liabilities, consistent with advance billing on the Alcoa Pinjarra contract.

Ratios

All derived. Interest coverage uses the company's EBIT and interest figures. A negative net debt/EBITDA reflects a net cash position. TipRanks cites FY2026 debt-to-equity of ~0.27 and ROE of ~12%; the difference in D/E likely reflects definitions (e.g., treatment of current leases). ROIC and cash conversion cycle are left blank because the inputs needed (invested capital definitions, COGS-based payable days) are not reliably available.

Commentary on trends and drivers

The boom (FY2022–FY2023): Revenue rose from A$71.8m in FY2021 to A$304.3m in FY2023. SIMPEC drove the step-change, winning large SMPE&I packages such as Fortescue's Iron Bridge wet plant and Cockburn Cement's Kwinana upgrade. Profitability did not keep pace, however. Gross margin fell from 11.1% to 6.4% in FY2023 and NPAT more than halved to A$1.76m despite record revenue. The 2023 Annual Report attributes the disappointment largely to the Iron Bridge project, where SIMPEC delivered A$212.5m of segment revenue but on unsatisfactory terms. This is the core lesson of the WestStar story: in fixed-price industrial construction, volume is not value, and a single troubled contract can erase a year's earnings.

The contraction (FY2024–FY2025): Revenue fell 32% in FY2024 and a further 36% in FY2025, to A$130.8m. Management attributed the decline to delays or withdrawal of major infrastructure and mining projects across Australia, especially in nickel and lithium, where investment paused (Appendix 4E FY2025). SIMPEC's revenue fell to A$39.1m in FY2025. Alltype held up better (A$85.5m), helped by the east-coast Kurri Kurri power project. Gross margin actually improved to 14.5% in FY2025 as the lower-margin mix rolled off. Under-recovered overheads tipped the group into a A$3.4m loss: SG&A rose from A$10.6m in FY2022 to A$19.1m in FY2025 (Kalkine/TradingView data), and interest costs and share-based payments also increased. Operating cash flow was -A$8.85m and cash fell to A$7.2m, the weakest liquidity position in the five-year window.

The recovery (FY2026): Revenue rebounded 47% to A$192.5m and NPAT returned to A$3.8m. The shape of the recovery matters. SIMPEC revenue more than tripled to A$139.9m, driven by Alcoa Pinjarra (A$115m), Tianqi Kwinana, McArthur River and Western Harbour Tunnel. Alltype revenue fell 44% to A$48.1m as east-coast projects finished, despite the ~A$40m multi-contract win. The group is therefore again concentrated in SIMPEC, and SIMPEC is concentrated in one contract. The balance sheet roughly doubled in size, with total assets rising from A$55.2m to A$102.2m. The main drivers were receivables (A$55.8m), cash (A$24.1m) and new leases (long-term lease liabilities up from A$4.5m to A$9.7m, presumably for equipment and facilities). Equity rose only to A$31.8m. Nearly all of the headline net cash of A$12.3m is matched by A$21.0m of customer advances (unearned revenue), so "free" net cash is close to zero or negative.

Management guidance

No quantitative FY2027 guidance was identified. Disclosed work in hand gives partial visibility:

Much of this value was recognised in FY2026. The run-off profile implies first-half FY2027 activity could stay solid, but a revenue gap opens from early CY2027 unless new awards are announced.

Consensus expectations

None available (no coverage).

Bull case

1. Deep value with earnings support: At ~2.3x FY2026 earnings and ~0.27x book, the market prices in failure. Even a repeat of FY2026's A$3.8m NPAT would make the current valuation look inexpensive.

2. Emerging filtration niche: Back-to-back filtration plant awards (Alcoa, Glencore) create a specialty with structural demand as miners and refiners move away from wet tailings storage.

3. Disciplined recovery: Gross margin held at 11.9–14.5% through the FY2025–FY2026 cycle, compared with 6.4% in FY2023. This suggests post–Iron Bridge contracting discipline is real, and the optional R&D tax benefit (A$3.1m) adds upside.

Bear case

1. Revenue cliff in 2027: The Alcoa contract, the dominant source of FY2026–FY2027 revenue, finishes around Q1 2027, while Alltype has already shrunk 44%. Without large replacement awards, FY2027–FY2028 could look like FY2025 again.

2. Illusory net cash: The A$24.1m cash balance is underpinned by A$21.0m of customer advances. As the Alcoa work is completed, that money unwinds, and the FY2025 experience (OCF -A$8.85m) shows how fast liquidity can tighten.

3. Governance and dilution: A three-person board, recurring equity-settled payments (employee and consultant shares), material share-based payment expense relative to earnings, and errors in reported growth figures all point to elevated governance risk for minority holders.

Key catalysts and monitorables (next 12 months)

Concluding analyst verdict

WestStar Industrial is a classic micro-cap contractor: operationally capable, financially fragile, and priced as though the next downturn has already arrived. Over five years the group has shown it can win and deliver substantial work for demanding owners. Revenue peaked at A$304m in FY2023, and SIMPEC secured a A$115m Alcoa contract while the company's market value was under A$10m. FY2026 confirmed the recovery thesis: revenue rose 47% to A$192.5m, NPAT returned to roughly A$3.8m, and ROE recovered to around 12–13%.

The quality of those earnings deserves scepticism. Net margins have never exceeded 2.4% in the review period, so returns depend almost entirely on avoiding a single bad contract. Free cash flow was negative in three of the four years with full data. FY2026's strong closing cash is largely customer money held in advance, so an investor buying at a negative headline EV is really buying a business with roughly zero underlying net cash and a large near-term contract run-off. Alltype has halved, Watmar remains small, and the group is once again highly dependent on SIMPEC and on one customer.

Governance and disclosure are the other discount factors: a three-director board, repeated equity-settled payments, sizeable share-based payment expense, no broker coverage, and arithmetic errors in statutory reports. These explain much of the gap between the share price and book value.

Verdict: WestStar is a speculative, event-driven situation rather than a quality compounder. The asymmetry is real. A visible pipeline of replacement awards ahead of the Alcoa completion, combined with sustained gross margins above 11% and positive operating cash flow after advances unwind, could justify a material re-rating towards book value (~A$0.23 per share). Absent new awards by mid-2027, the FY2025 pattern of revenue collapse, losses and cash burn is the base risk. Monitoring should centre on contract awards, the cash/contract-liability bridge at the half-year, and the outcome of the November 2026 AGM.