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From time to time, we venture away from the desk and travel around the country and overseas to meet companies on their home turf, to gain a better understanding of a company’s operations and the culture that drives the business. As such, last month I travelled to Perth to press the flesh with a vast number of companies. What follows is my version of a ‘postcard’ from the trip, touching on a few high-level observations.
CTI Logistics (ASX: CLX) is a diversified transport and logistics operator headquartered in West Perth and was founded in 1974. The business has a wide breadth of services with exposure to an extensive range of customers including mining and energy, consumer and construction.
The site tour was extremely timely given the volatile fuel prices driven by the conflict in the Middle East, with the majority of the discussion around the levers the company can pull to manage not only the top line but also margins during this crisis.
Given we were time constrained, we saw the full site in a golf buggy, which was a reminder not only of the extensive capability they have established Northeast of the CBD, but also the fact that CLX own the majority of their assets, which is valued at cost on the balance sheet and is estimated to be worth $1.44 per share.
Finally, it was 12 months ago since we last visited the site, thus I was eager to see the completion of their latest development, the new warehouse. While the team were going through some site optimisation, it was evident their methodical approach and expertise was being flexed as they drive utilisation for their new site and surrounding warehouses.
Now what might look underwhelming at first glance, XRF’s head office (located in Balcatta) is nothing flash, but it houses their consumables division, which was established by David Brown in 1972. I was lucky enough to get a guided tour of the production facility by David’s son Jeff, (General Manager) who has been in the business for 25 years.
To say the technological information went way over my head would be an understatement. Despite this, nothing beats meeting fanatical executives who are obsessed with the detail. It might not come by surprise given they own ~9 million shares, but what is surprising is the consumables division generated $2.5m of PBT in 2020, but fast forward to 1H26, the division generated $3m of PBT in the recent half.
Finally, we spent some time talking about XRF’s recent acquisition of a combustion gas analysis business from global behemoth Bruker Corporation (NASDAQ: BRKR). As outlined in the Q3FY26 NAOS Quarterly Investment Report, XRF has several key drivers being:
The recent acquisition is a great example of a capital allocation decision that ticks all of these boxes. We hold management in high regard, and they are aligned with shareholders, which is great to see.
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Duratec Limited (ASX: DUR) was established in 2010 and is a business that we have followed closely since its IPO in November 2020. It’s a construction and services contractor based in Perth with exposure to several key areas being Defence, mining, energy, building and facades. The business exhibits a “founders” mentality, having been established by current Managing Director, Chris Oates, and Phil Harcourt, currently Non-Executive Director.
Given the large scale of investments taking place on the West Coast of Australia, seeing Duratec’s assets was a key component of the trip and our investment thesis.
First stop was to WPF Engineering (pictured above), which is their engineering and fabrication business that Duratec acquired in 2022. It services every stage of an asset lifecycle within the energy sector. Walking the site, it was clear there is a barrier to entry given the size, scale and expertise that was on display. There are little options locally for this type of work and potential limitations on finding labour in an already tight market, hence in our view, WPF seems to be in a good position going forward.
Post WPF, it was off to Garden Island, which is 50kms southwest of the CBD and is home to HMAS Stirling, having been commissioned in 1978. The base provides operational and logistics support to the Royal Australian Navy ships. As part of the AUKUS program, the Federal Government is currently spending $8bn to expand HMAS Stirling’s infrastructure to get ready for the Submarine Rotational Force, with one UK and up to four US nuclear powered submarines visiting our shores in 2027.
For the contractors that we saw on Garden Island, there is clearly a first mover advantage given their presence and workforce that has been established. In Duratec’s case, they have been working on Garden Island for over a decade, completing a wide range of contracts, including wharf extension and restoration work in which they specialise.
It is worth zooming out for a second and as shown in the below map, there are several red boxes which highlight key areas of future development. As mentioned, $8bn will be spent on Garden Island, while the government has committed $12bn to be spent on the Defence Precinct at Henderson.
It doesn’t stop there, with WA set to move their freight terminal from Fremantle to Kwinana, which is estimated to cost north of $5bn. It’s also worth flagging that while we were there, it was announced that the Federal and State Government are committing a further $1.1bn to upgrade the arterial roads around the new freight corridor.
Clearly these are big projects that present sizable opportunities for players like Duratec that have an established capability, workforce and presence in the area. Albeit we expect competition for this work to be strong given the size of the cheques that the government is set to write.
Sticking with the contractor theme, we spent the majority of a day visiting several other contractors being SXE, SND and SRG. While all vary in size and capability, there was several consistent themes that were discussed:
Water – while the Defence industry gets most of the attention and limelight, water as a sector is facing a substantial investment period. It is estimated that Sydney Water has planned to spend $34bn in capex over the next 10 years. This large capital program is driven by not only population growth and aging infrastructure asset base but also water security and congestion management.
Data centres – with the explosion in demand for AI models, data centres have seen rapid growth, which presents a huge opportunity for some contractors. But not all have the capability and expertise to deliver some of the large-scale projects. We expect competition to increase, at the same time expect to see increased M&A activity as companies try to get exposure to a growing thematic.
Labour shortages – given the large projects, especially with the ones mentioned above, the ability to attract and retain staff is becoming a large competitive advantage. We expect to see wage inflation creep above CPI but do believe culture will play a role in retaining staff.
John’s Building Supplies (JBS) is a buildings material distributor that was acquired by Big River Industries Limited (BRI.ASX) back in December 2025.
JBS is a family run business that has been in operation since 1982 and has established an extension network of customers in the Welshpool area of WA. The business has over 800 active customers and over the last 3 years has averaged $41.2m of revenue and EBITDA of $5.2m.
During the tour of the 4,000 sqm site, it was evident that the product mix is more skewed to timber panels, cladding and interiors, compared to BRI’s existing Perth branches that have a greater exposure to form ply and Frame and Truss.
Synergies and cross-selling opportunities will take some time, but the acquisition presents an excellent opportunity for BRI to gain a greater exposure to the Perth housing/construction market plus expand their product offer. Finally, the rebranding of the branch was taking place while I was there, hence two photos below, one featuring the new branding (and sans my face)
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