Why the SRG Global (ASX:SRG) share price is up 5% today

The SRG Global share price is climbing higher again today, up 5% in afternoon trading. We take a look at what’s driving the company’s shares.

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The SRG Global Ltd (ASX: SRG) share price is up 5.26% in afternoon trading, having retreated from earlier gains of 9%. This follows on the company’s revised guidance update released to the ASX yesterday. Today’s lift in the SRG share price brings the company’s gains to 122% since its shares hit their 2020 low on 24 March. Shares are now on par with where they finished 2019, having reversed the COVID-led selloff earlier this year.

What’s driving the SRG Global share price higher?

The SRG share price is on the move today after the company revised its 2021 financial year guidance for earnings before income, tax, depreciation and amortization (EBITDA) to $42–45 million, up from $38-42 million.

The company forecast its first half FY21 EBITDA will be $19–20 million, and highlighted that $550 million of contracts with repeat and targeted clients have been announced since 1 July.

SRG Global now has $1 billion of work in hand, up 41.5% since 30 June.

Looking ahead, the company stated it expects further near-term contract wins with its repeat and targeted clients.

Commenting on the revised guidance, David Macgeorge, managing director said:

SRG Global’s strategy has been to shift towards a greater proportion of annuity / recurring earnings, with a disciplined focus on core business, core clients and core geographies. This strategy puts the company in a very strong position to continue building momentum into 2021, providing the confidence for our upgraded guidance for FY21…

The company is well-placed to continue to fund future growth requirements with our strong liquidity / balance sheet position. The improved financial performance and guidance is underpinned by our recent contract wins, record work in hand position of $1 billion and a high level of annuity earnings. The outlook for SRG remains positive given the company’s exposure to diverse sectors and geographies, quality commodities, a tier one client base and growing levels of infrastructure construction and maintenance expenditure.

What does SRG Global do?

SRG Global is a construction and maintenance services company. Its operating segments include construction, asset services, and mining services. As part of its construction business, the company supplies integrated products and services for the development of complex infrastructure. These include bridges, dams, high rise towers, car parks, and hospitals.

With the SRG share price up more than 14% in the first two trading days of December, investors are clearly pleased with the upgraded guidance.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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