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Mining Services - Results Review

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Markets are expecting big things from mining services companies this reporting season. With good reason; a number of companies in this space are likely to demonstrate solid momentum into FY18. However, whether performance will be strong enough to support recent share price gains is not as clear, and we are finding it difficult identifying value in the stocks we cover. We feel anything other than outperformance may disappoint. From an operational point of view we like both ASL and ANG; they will very likely post solid results and indicate good growth in FY18. However, from a valuation perspective we think this is already reflected in share prices. PEA is a reliable performer, but the emerging competition in this space gives us pause. We would still avoid MCE; it will take time to diversify away from offshore drilling. GNG is currently the best investment option – FY18 will be a record year and, on our numbers, will support a dividend yielding >7%.

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