Latest Research

Paragon Care (PGC) - Strengthens Offering

Paragon Care LogoThe $8.5m acquisition of an immunohaematology business strengthens PGC’s product offering, broadens relationships, is well within balance sheet capacity, and maintains strategic impetus. Acquisitive and organic growth to date has been well managed and suggests upside risk to our forecasts. We maintain a positive view and buy call on a valuation that has been upgraded slightly to $1.15 (prior $1.12).

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Pacific Energy (PEA) - Loss Of Newmont Contract

Pacific Energy LogoPEA has been unsuccessful in its tender for two new gas-fired power stations at Newmont’s Tanami operations. Currently PEA has ~46MW of diesel-fired generators installed at Tanami, which will be de-commissioned and redeployed once PEA’s current contract terminates at the end of CY2018. The loss of Tanami represents a 16% reduction in PEA’s current contracted capacity. Near-term negative sentiment and uncertain long-term growth underpin our HOLD call on a revised $0.67 valuation (previously $0.70).

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Austal (ASB) - We'll Take It

Austal LogoAlthough design partner Fassmer lost the OPV bid, ASB will be involved in the programme with winning bidder Luerssen. This is not unexpected given ASB’s shipbuilding experience and existing facilities. Importantly, the work will help underpin Henderson’s operations, backfilling our Australian forecasts (rather than adding to them). We expect the maturing LCS programme and significant commercial work to boost FY19 earnings. Momentum is positive and we maintain a buy call on a $2.10 valuation (prior $1.96).

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St George Mining (SGQ) - Stricklands Delivers 10m Of Massive Sulphides

St George Mining LogoSt George Mining (SGQ) has announced an intersection of 17m of nickel-copper sulphides from 37m in hole MAD71 at its Stricklands prospect, within the Mt Alexander Project. Within this intercept is 10m of cumulative massive sulphide material, with an average XRF grade of 5.5% nickel & 2.1% copper. We note there has been a very high correlation of handheld XRF to final assay grades. This is the thickest intercept of massive sulphides at Stricklands to date and highlights the potential of the prospect. Combined with the Cathedrals and Investigators prospects, the Mount Alexander Project is shaping up as one of the most interesting high-grade nickel-copper discoveries in recent years.

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Southern Cross Electrical Engineering (SXE) - Funding Growth

Southern Cross Electrical Engineering LogoAfter acquiring East Coast-based Heyday in FY17 SCEE transformed its business by diversifying revenue streams across sectors and geographies. The Company now has strong growth prospects through exposure to the NSW commercial market. The recent placement ($33.2m at an issue price of $0.75) will provide necessary working capital to support this strong growth. However, despite our positive view, recent share price gains leave little upside to our revised $0.80 valuation causing us to downgrade to a HOLD.

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