GenusPlus achieves record growth, robust balance sheet, but HOLD warranted on valuation

Key Takeaways: GenusPlus Group has delivered a standout year, with record earnings, strong cash flow, and a $2 billion order book that provides excellent visibility. The company is benefiting from powerful tailwinds in Australia’s energy transition and digital connectivity rollout, fueling demand across its infrastructure, energy, and communications businesses. Profitability continues to climb, dividends are on the rise, and a strong balance sheet gives room for both reinvestment and shareholder returns. Importantly, since our initial recommendation at $2.16 per share, the stock has gained more than 191%, highlighting the strength of our call and the company’s ability to execute. With valuations now looking stretched, however, we move to a HOLD, acknowledging GenusPlus’ strong positioning and long-term prospects but waiting for a better entry point before adding further exposure. --- Building the backbone of Australia’s energy and communications future GenusPlus Group Limited (ASX: GNP) is a critical enabler of Australia’s energy and communications networks. The company designs, builds, and maintains electrical transmission lines, substations, and large-scale battery systems. It also extends its expertise into fibre networks and data cabling, offering complete lifecycle solutions. Its operations span Infrastructure, Energy & Engineering, and Services, with Infrastructure contributing the majority of revenue. Through its integrated offering, GenusPlus has become a trusted partner for utilities, mining operators, and governments as Australia pushes forward with its energy transition and digital connectivity expansion. Record earnings and a growing pipeline highlight strong growth trajectory The fiscal year ended June 30, 2025, marked a record performance for GenusPlus: - Revenue rose 36% to $751 million. - Normalised EBITDA climbed 49% to $67.4 million. - Statutory net profit after tax increased 84% to $35.4 million. Supporting this growth, the company reported a record $2 billion order book, alongside $2.4 billion in tendered projects. These figures provide exceptional revenue visibility and highlight the scale of opportunities ahead. Strategic acquisitions have also deepened capabilities and widened the company’s geographic reach, reinforcing its upward trajectory. Benefiting from structural tailwinds in energy transition and digital connectivity GenusPlus is well positioned in two sectors undergoing significant change. In energy, government initiatives are driving large-scale investment in renewable projects, battery storage, and grid modernisation. In communications, the expansion of digital health systems and connectivity infrastructure is accelerating demand for specialist services. These macro drivers align perfectly with the company’s expertise, strengthening its long-term growth outlook. Rising profitability and dividend growth underline value creation for shareholders Operational gains are translating directly into profitability. Basic earnings per share reached 19.7 cents, up more than 80% from the prior year. Net profit margin expanded to 4.71%, reflecting improved scale and cost management. Shareholders will also see higher returns, with a final fully franked dividend of 3.6 cents per share, a 44% increase. This balance between reinvestment and distributions underscores GenusPlus’ ability to generate value on multiple fronts.

Strong balance sheet and cash generation provide financial flexibility The company’s financial position is solid. As of June 30, 2025, GenusPlus reported $160.8 million in cash and a net cash position of $113.5 million. Operating cash flow rose 46% to $120.9 million, with an exceptional free cash flow-to-EBITDA conversion rate of 212.3%. Its debt-to-equity ratio stands at just 6.3%, giving the company ample headroom to pursue organic expansion or acquisitions without relying heavily on debt. Valuation supported by earnings momentum but limits upside potential On FY2025 earnings per share of AU$0.20, GenusPlus trades at a P/E ratio of 32.2x and a price-to-sales ratio of 1.5x. While these multiples reflect strong investor confidence and the company’s role in critical infrastructure development, they also suggest that much of the growth story is already priced in. Since our initial recommendation at $2.16 per share, GenusPlus has delivered a remarkable gain of more than 191%, reflecting the company’s ability to execute on its strategy and capture structural tailwinds. However, with the current valuation stretched relative to peers and fundamentals, we believe upside is now more limited. We therefore shift to a HOLD rating, recognising GenusPlus’ strong balance sheet, record order book, and attractive industry positioning, but waiting for a more compelling entry point before recommending additional exposure.