FYI | May 22 2020
Pitt Street Research has identified Parkd as a logical beneficiary of the $650m National Commuter Parking Project
By Pitt Street Research
Even with most of the world currently parked at home, Parkd ((PKD)) continues to experience positive interactions on the commercial front.
The company has been gaining traction within end markets, especially the government sector, riding the wave of stimulus provided by the $650m National Commuter Parking Project.
In our view, these developments are expected to provide resilience to PKD to sail through the current crisis.
Federal spending on commuter car parks set to drive growth
Under the $650m National Commuter Parking Project, PKD has completed four technical design works for local councils.
Design work comprises identification and configuration of both permanent and temporary car parks, which will be largely funded by the Federal government.
Notably, the fund, created as part of the 2019 budget, is set to see the construction of 50 new commuter car parks over the next 2–3 years.
In our view, as more local councils seek disbursals under this fund, demand for PKD’s design and engineering services is set to grow in the short term. The completion of these design works also gives PKD the opportunity to upsell its car park construction services.
PKD optimises operations via cost reductions
In March 2020, PKD announced cost reduction measures, applicable from 4Q20 onwards, which are expected to decrease operating costs by 25%.
These include a combined 20% decrease in salaries of executives and senior management, elimination of discretionary spending, and a freeze on directors’ fees, capex and recruitment.
We believe these moves will help ensure the company can ride out the storm created by the COVID-19 pandemic.
Potential for ramped up infrastructure spending
We expect PKD to emerge from the COVID-19 crisis in good shape, given that project tendering has been ongoing and construction is considered an essential service.
In the near term, we may see heightened activity from the Federal and State governments when it comes to starting up, and expediting, infrastructure works as a means to create new jobs to counter the fallout from COVID-19.
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