##{"id":59593,"date":"2012-03-02T10:55:18","date_gmt":"2012-03-01T23:55:18","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2012\/03\/02\/moelis-sees-value-in-maca\/"},"modified":"2012-03-02T10:55:18","modified_gmt":"2012-03-01T23:55:18","slug":"moelis-sees-value-in-maca","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2012\/03\/02\/moelis-sees-value-in-maca\/","title":{"rendered":"Moelis Sees Value In MACA"},"content":{"rendered":"

\n\t – Moelis<\/span> initiates on MACA<\/span> with A Buy rating
\n\t – Earnings growth and valuation are attractions
\n\t – Good visibility of earnings provides confidence<\/strong><\/p>\n

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

\n\tMACA<\/span> ((MLD<\/span>)) is a contract mining company, offering loading and hauling, drill and blast and crushing and screening services to the iron ore and gold sectors in particular. The company also has a civil division, where work-in-hand is continuing to grow, with $28 million secured as at the end of December 2011.<\/p>\n

\n\tStockbroker Moelis<\/span> has initiated coverage on MACA<\/span> with a Buy rating and a price target of $2.70, seeing significant scope for earnings growth in coming years and an attractive valuation on the shares at current levels.<\/p>\n

\n\tEarnings visibility is a key factor in support of Moelis's<\/span> positive view, as the broker notes the average duration of MACA's<\/span> $1.4 billion of work-in-hand was 38 months as at the end of the 1H12<\/span>. Most of MACA's<\/span> work is for the mid-tier mining sector, which includes the likes of Regis Resources ((RRL<\/span>)) and Atlas Iron ((AGO)).<\/p>\n

\n\tWhile this means MACA<\/span> misses out on work from some of the sizable expansion plans of the majors, Moelis<\/span> sees an advantage of less competitive pressures and the ability for MACA<\/span> to grow as clients expand.<\/p>\n

\n\tThe focus on iron ore and gold is also a positive as Moelis<\/span> sees a robust medium-term outlook for demand in both markets, which is expected to underpin expansion plans for the mid-tier miners. The other factor seen as a positive for Moelis<\/span> is capacity constraints among mining services companies due to strong demand from major miners should improve the competitiveness of MACA<\/span> within its target markets.<\/p>\n

\n\tThis suggests solid earnings growth, which is factored into Moelis's<\/span> forecasts. In earnings per share (EPS) terms the broker expects 22.7c this year and 26.4c in FY13<\/span>, up from the 19.6c achieved in FY11<\/span>. There is little basis for comparing the forecasts of Moelis<\/span>, as none of the brokers in the FNArena<\/span> database offer coverage on MACA<\/span>. This is no great surprise given a current market capitalisation<\/span> of around $365 million.<\/p>\n

\n\tMoelis's<\/span> forecasts imply earnings multiples of 10.7 times in FY12<\/span> and 9.7 times in FY13<\/span>, while yield is reasonable at an expected 4.3% for FY13<\/span>.<\/p>\n

\n\tShares in MACA<\/span> today are unchanged as at 10.40am with a last sale price of $2.32. This compares to a range over the past year of $1.74 to $2.85. <\/p>\n

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\n\tFind out why FNArena<\/span> subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"