Latest Research

Peet (PPC) - WA State Government JV For Brabham

Peet Limited LogoThe WA State Government’s housing project in Brabham will take advantage of proposed transport infrastructure linking the Swan Valley to Perth and provide PPC, as the preferred proponent, with a robust development pipeline through next decade. PPC will establish a wholesale fund with the Perron Group and act as development manager. The Company entered 2H17 in good shape, with a sound balance sheet (recently bolstered by a $50m 51/4 year bond issue) and a well-diversified land bank centered on growth corridors across Australia. We maintain our positive view and buy call.

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Matrix Composites & Engineering (MCE) - Staying Afloat

Matrix Composite & Engineering LogoOffshore oil and gas remains a tough market given low oil prices and the rise of shale producers. This has meant very poor sales for MCE in its traditional riser buoyancy market, leading to Company guidance for an anaemic $9m revenue for 2H17. This has caused management to look to diversify the business away from riser buoyancy to better task the composites manufacturing facility in Henderson. Whilst some success has been had in initial diversified products, we believe it will take time to penetrate new markets. The level of uncertainty is reflected in our HOLD call on a revised $0.43 valuation (previously $0.62).

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GR Engineering (GNG) - Revenue Deferred

GR Engineering LogoGNG downgraded FY17 revenue guidance due to slippage in anticipated progress claim timing on recently awarded projects, causing ~$30m revenue to be deferred from FY17 into FY18. As a result, we have decreased our FY17 revenue and EBITDA forecasts to $215m and $16m respectively (previously $250m and $25m). More positively, this deferment of revenue has boosted FY18, where GNG has given guidance for $300-$330m. The anticipated record revenue for FY18 underpins our BUY recommendation on a revised valuation of $1.70 per share (previously $1.75).

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Kibaran Resources (KNL) - Revised BFS: Production Increased

Kibaran Resources LogoKibaran Resources (KNL) released a revised Bankable Feasibility Study (BFS) for its 100% owned Epanko Graphite project in Tanzania. The study outlines a 50% increase in production to 60ktpa graphite concentrate for a 15% increase in pre-production capex (US$88.9m vs the US$77.5m in the 2015 BFS). The project generates a 30% post-tax IRR and has an initial 18-year mine life. Epanko is differentiated from other potential graphite development projects by its high grade and its large flake size distribution. KNL is the only graphite developer to have the majority of its forecast production in binding offtake agreements with non-Chinese parties. The revised BFS is differentiated from other studies by the rigour of independent assessment to meet Tanzanian and international social and financial standards. The Company is also investigating downstream processing to produce battery grade spherical graphite, with a BFS expected Q3 CY17.

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Metro Mining (MMI) - Debt Secured - Ready To Break Ground

Metro Mining LogoMetro Mining (MMI) has secured $40m debt financing through Sprott Private Resource Lending and Ingatatus AG Pty Ltd, a related party of Metro’s strategic cornerstone shareholder Balanced Property. These funds will support development of the Bauxite Hills project which is expected to commence production Q2 CY18. MMI also announced that it had attained State Environmental Approvals and final Federal Approvals are expected imminently. Project construction is on track to commence Q3 CY17. Argonaut maintains a BUY recommendation with a $0.44 target price.

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