GenusPlus Group Ltd (ASX: GNP) shares have been incredible performers over the past 12 months.
During this time, the ASX stock has risen by a whopping 200%.
But if you thought it was too late to invest, think again!
That's because Bell Potter believes there's still plenty more upside for its shares from here.
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What is this ASX stock?
GenusPlus Group is an Australian infrastructure services provider specialising in the end-to-end design, construction, and maintenance of electrical transmission networks, substations, battery energy storage systems, and telecommunications infrastructure.
It has just announced a binding agreement to acquire MPC Kinetic (MPK), which is an Australian infrastructure and energy services provider. It primarily operates in the onshore gas, water, and renewable energy sectors.
Bell Potter is positive on the deal and highlights its attractive transaction metrics. It said:
Assuming MPK achieves its maximum earn-out hurdle, GNP will purchase MPK for 5.7x FY27 EBIT (vs Industrial Services peer group average of 13.1x and GNP's pre-acquisition multiple of 17.7x). GNP's pro forma leverage is expected to be 0.39x EBITDA (assuming total consideration settled). FY26 EPS(A) accretion is forecast to be 45-53% based on the earn-out limits.
It also highlights that the transaction gives the ASX stock exposure to the attractive Australian domestic gas and LNG markets. It adds:
Strategic rationale: 1) Diversifies GNP's end-market exposures; 2) provides entry into the attractive Australian domestic gas and LNG markets, which are anticipated to be short supply in the long-term; and 3) MPK's Civil Balance of Plant (CBOP) services are complementary to GNP's Electrical Balance of Plant (EBOP) capabilities, enabling GNP to deliver a holistic service offering in the renewable energy sector.
Buy rating
According to the note, the broker has responded to the news by retaining its buy rating on the ASX stock with an improved price target of $12.00 (from $10.50).
Based on its current share price of $10.10, this implies potential upside of approximately 19% over the next 12 months.
And while dividends are expected to be paid over the period, the forecast dividend yield is only a modest 0.6%.
Overall, Bell Potter is a fan of the transaction to acquire MPK and sees upside risk to consensus estimates. It concludes:
The MPK acquisition is strategically compelling. GNP is well positioned to capitalise on rising spend in the onshore gas, renewable energy and water infrastructure sectors. GNP's NTM PE of 19.2x is undemanding. We continue to see further upside to consensus earnings expectations driven by potential contract awards for large transmission developments and further accretive acquisitions.
