Vysarn is a vertically integrated company with 5 business divisions providing water services in Western Australia.

The core business, Pentium Hydro drills bore fields and extracts the water above the iron ore. More than 75% of the iron ore mines in the Pilbara have a great part of ore below the water table, which must be dewatered to be exploited. That is why Vysarn is not having problems signing multi-year contracts with Tier 1 ore miners. In fact, they are increasing the price. With the cash flow of this business, Vysarn is expanding to less capital-intensive divisions.

Despite the rest of the divisions being settled/acquired in 2021 or 2022, they are already good cash generators with positive surprises in the first half of the year. And with the optionality of a very interesting Joint Venture of fluid containment which could bring $0.5-1mto the bottom line per contract signed

The business is led by James Clement with who we had the opportunity to chat (you can read it on the second link). And the Chairman, Peter Hutchinson, who has long experience in ASX-listed companies and in M&A. He already led a company in which the share price did an x37.

At the beginning of the year, the board expected a NPBT of $5.1m and an EBITDA of $6.1m only for Pentium Hydro in the second half of the year (fiscal year ended on 30th June). After a c.20% revision upward in both metrics in May. This week, the company released another earnings update in which they expect to deliver a NPBT of $6.8-$7m and an EBITDA of $7.5m for Pentium Hydro.

The current market cap is around AUD $60m . We presented this small micro-cap in February and since then the stock has gone up +75%. The good news? It trades as cheap as in February, less than 3.5x EV/EBITDA and 7 P/E for 2024, given our estimates.