##{"id":58337,"date":"2011-06-22T09:46:55","date_gmt":"2011-06-21T23:46:55","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2011\/06\/22\/solid-earnings-outlook-keeps-maca-limited-at-buy\/"},"modified":"2011-06-22T09:46:55","modified_gmt":"2011-06-21T23:46:55","slug":"solid-earnings-outlook-keeps-maca-limited-at-buy","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2011\/06\/22\/solid-earnings-outlook-keeps-maca-limited-at-buy\/","title":{"rendered":"Solid Earnings Outlook Keeps MACA Limited At Buy"},"content":{"rendered":"

\n\t– MACA guidance meets expectations despite disruptions
\n\t– DJ Carmichael sees MACA as well placed to further increase order book
\n\t– Buy rating retained by DJ Carmichael as MACA offers value at current levels<\/strong>
\n\t <\/p>\n

\n\tBy Chris Shaw<\/p>\n

\n\tMACA Limited ((MLD)) provides contract mining, civil earthworks, crushing, screening and material haulage solutions in the Western Australian market. While MACA has experienced some disruptions to operations in the June half, primarily due to wet weather, management last week guided to net profit for the year of $27-$30 million.<\/p>\n

\n\tThis is in-line with DJ Carmichael's forecast of $28.7 million, the broker noting MACA has managed to offset the difficult conditions to some extent by a continued focus on both efficient maintenance of its mining fleet and on corporate overheads.<\/p>\n

\n\tAdditional contract wins also helped, DJ Carmichael noting MACA has completed a Definitive Feasibility Study for Garden Well project of Regis Resources ((RRL)) and is well placed to services other projects being developed by Regis and WPG Resources ((WPG)).<\/p>\n

\n\tOn DJ Carmichael's numbers, work-in-hand for MACA now stands at $1.3 billion, which gives increased confidence in the broker's existing revenue forecast for FY12 of $330 million as this is better than 90% covered by current work-in-hand and extensions.<\/p>\n

\n\tTo reflect good visibility in MACA's order book, DJC has lifted revenue assumptions beyond FY12, with scope for further increases if additional contracts can be won. Current earnings per share (EPS) forecasts stand at 20.1c for FY11 and 22.9c for FY12. <\/p>\n

\n\tThe stockbroker has a price target on MACA of $3.03, down slightly from $3.10 previously given recent market weakness and adjustments to earnings forecasts. Based on the revised target MACA is trading on an earnings multiple of 10.4 times in FY12, with recent share price resilience helping close a valuation gap to peers.<\/p>\n

\n\tGiven the attractive multiple on offer DJ Carmichael rates MACA as a Buy. Key catalysts for any re-rating of the share price should be contract extensions and new contract wins.<\/p>\n

\n\tThere is little to compare DJ Carmichael's view on MACA with the broader market, given a market capitalisation of just over $350 million at current levels.<\/p>\n

\n\tOver the past year the shares have traded in a range of $1.40 to $2.96.<\/p>\n

\n\t <\/p>\n

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