NRW Holdings (ASX:NWH) – like many ASX-listed contractors – enjoyed solid gains in 2025. For NWH, the key factors that have led to a re-rating include a solid contract pipeline, a high win rate for new contracts, margin expansion and accretive acquisitions.

We recently researched NWH in The Dynamic Investor to assess whether current levels present an attractive entry opportunity.

About NRW Holdings

NRW Holdings (NWH) is a diversified contract services provider to the resources and infrastructure sectors in Australia with extensive operations nationwide. NWH currently reports results across three segments: Civil, Mining and Minerals, Energy & Technologies (MET). The Company also provides drill & blast operations via different group divisions. In early September 2025, NWH announced the acquisition of Fredon Industries (Fredon), which will be categorised as a 4th segment.

NWH has been an active Merger & Acquisition participant making notable acquisitions such as BGC Contracting in 2019 and Primero in 2021. Key clients include organisations such as BHP, RIO, FMG and Main Roads WA and includes property developers such as Stockland and Mirvac Group.

Key Fundamental Drivers

Strong Revenue Trends

NWH has an elevated active tender balance complemented by a strong bid-win rate. The revenue outlook is also supported by a solid pipeline (>$200b) of proposed and committed major projects in WA with known expected construction commencement dates. Including proposed projects with unknown construction commencement timing, the pipeline increases to ~$290b. While we acknowledge that not all of these projects are likely to proceed, it is worth noting that the industry is currently more prepared to commit to major projects, compared to FY25.

Energy, hydrogen, iron ore and renewable are large contributors to WA major project pipeline. In FY25, sustaining iron ore CAPEX was a key driver, with project awards relating to other commodities remaining subdued. However, contractors are citing that gold project awards in recent months have spurred other commodities leading to a more favourable environment for the industry.

Fredon Acquisition Likely to Accelerate Growth Opportunities

The acquisition of Fredon expands NWH’s suite of offerings adding electrical, mechanical, infrastructure, technology and maintenance (EMIT) services. The Fredon acquisition was stuck on an attractive multiple of 5.2x (assuming maximum earn-out), which is well below current sector peers. As such, the acquisition is expected to be highly-accretive to EPS (around mid double digit).

Fredon has secured a myriad of data centre contracts demonstrating solid project award momentum. Fredon has locked in four contracts amounting to ~$150m. This takes overall Work in Hand (WIH) for NWH to $7.25b (from $7.1b as at the end of November) with Fredon’s WIH standing at $1.15b ($1.0b at the time of acquisition).

Scope for Margin Expansion

We highlight two factors underpinning upside to current consensus EBITA margin estimates:

i. In a recent trading update, NWH noted a strong start to FY26 for the Mining segment, with operations tracking ahead of internal expectations and no material wet weather impact to date. The 2H26 period will also benefit from an increase in scope for the Stanmore South Walker Creek project.

ii. Following a period of modest external recruitment activity at NWH in early 1H26, recruitment levels surged sequentially in October 2025. This trend is indicative of accelerating momentum in project awards and NWH’s confidence to expand capacity to pursue what appears to be a sustainable work pipeline. While skilled labour availability remains tight, NWH have managed to retain talent, supporting execution and reinforcing solid near-term revenue visibility. With opportunities spanning across most commodities and sectors for contractors such as NWH, recruitment levels are expected to remain elevated in the near-term.

Balance Sheet Capacity to Pursue Further Acquisitions

The Company has a moderate gearing position. As at 30 June 2025, NWH had net debt of $145m, representing gearing of 16.1%. Gearing increased from 5.1% as at 30 June 2024, largely driven by new asset financing used to funding the acquisition of HSE Mining.

NWH funded the Fredon acquisition via its corporate debt facilities. As a result, the Company expects a short-term uplift in gearing. Importantly, gearing is expected to remain well below the medium-term target of <30%.

Prior to the announcement of the Fredon acquisition, the Company had upsized its debt facility flagging corporate activity, which is likely to continue. To this end, we note that NWH has a strong track record in executing EPS-accretive acquisitions at low transaction multiples. More recently (2024), NWH acquired HSE mining at ~4.7x EBIT, which is materially lower (~2.5x) when factoring in the expanded scope at South Walker Creek.

Fundamental View

NWH shares are currently trading on a 1-year forward P/E multiple of ~14.5x. Although trading at the top end of the range over the last two years, the current multiple is undemanding in the context of an EPS growth profile of +12% over FY25-28 on a CAGR basis. While the market is not ascribing a premium rating to NWH, we highlight several catalysts for the shares over the short-to-medium term:

i. The strategic acquisition of Fredon is performing well and is a key driver on upside risk to consensus forecasts in FY27/28.
ii. NWH has a large and growing pipeline of active tenders and opportunities across all segments, complemented by a strong bid-win rate.
iii. The industry is currently more prepared to commit to major projects, including a higher likelihood of project awards for commodities other than gold.
iv. The potential for further EPS-accretive acquisitions.

Charting View

NWH has been trending well during the past 6 months. It has respected the 50 day Moving Average (blue line) during this time and investors can use this as their trailing stop. It bounced well off this line over the past several weeks and it hasn’t run too far from it yet. This means that current levels are still a buying opportunity and NWH should continue to trend higher from here.

 

Michael Gable is managing director of Fairmont Equities.

 

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