FYI | Feb 11 2020
Pitt Street Research initiates coverage of PARKD, provider of modular car parking solutions.
By Pitt Street Research
PARKD Limited ((PKD)) is a Western Australia-based construction technology company that provides temporary and permanent modular car parking structures of up to six levels (including ground level).
PKD’s solutions can be deployed by various end users, which significantly expands the company’s total addressable market.
Innovation to disrupt traditional construction methods
The modular design of PKD’s car parks delivers additional flexibility and cost efficiencies compared to traditional structures. PKD uses prefabricated concrete-based components, customised as per user’s requirement.
Moreover, PKD outsources the production of its components to construction companies such as Reinforced Earth, Westkon and Delta Precast.
This helps lock in cost synergies and gain expert involvement for product development and improvement. Also, as components are manufactured off-site and deployed on-site, the overall construction time is significantly less than in the case of traditionally constructed car parks.
We believe this provides a substantial value-add to end customers and should underpin PKD’s acceptance in target markets.
Federal infrastructure spending fuels growth
In the 2019 budget, the Australian Federal government created a $650m National Commuter Car Parks fund. Driven by this investment, a number of car park projects around commuter transport hubs are expected to be constructed in the medium term.
We believe that with a scalable low-cost operating model, PKD has a considerable growth opportunity by participation in this infrastructure spending having already won technical design works for 3 commuter car parks in Sydney.
First successful delivery underpins future growth
In FY2019, PKD was paid in full for its first project after a lease period of 6 months to City Subaru. The car park was assembled at their dealership in 12 days and delivered, turn-key, in 16 weeks, virtually half the time when compared to traditional construction.
We believe the successful delivery of this car park has improved PKD’s visibility in the industry and lay the groundwork for receiving additional work.
However, for the sake of conservatism, we will wait for management to scale up operations, win additional project tenders and engage with more clients, before conducting a financial valuation of the company.
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