APM Human Services: CVC Expected To Close the Deal as APM Wins New Contracts

APM has won several new employment services contracts in North America with a combined contracted revenue of roughly AUD 1 billion over five years. This includes a significant employment services contract in Toronto, Canada commencing late fiscal 2025. Accordingly, we have increased our revenue forecasts by 5% on average over our 10-year forecast period. However, the positive valuation effect is largely offset by a reduction in our gross margin forecasts by 50 basis points on average to 29% at midcycle. The North American market primarily operates on lower-margin cost-plus and cost-reimbursement contracting models. As a result, our earnings estimates only increase marginally.