MCE’s business update confirmed weak FY18 performance, but also provided encouraging signs the revenue diversification strategy is gaining traction. We are expecting improved financial performance from MCE in the coming years, although admit the pace of recovery is hard to predict. This uncertainty is reflected in our little-changed valuation of $0.50 (prior $0.47). There is significant operating leverage in the business as revenue grows, but we believe turnaround evidence is needed to provide more clarity and reduce forecasting risk.
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