Latest Research

Otto Energy - Company Update

Otto Energy LogoOtto Energy's South Marsh Island Oil field (SM71) continues to perform within expectations and the newly re-completed F2 is producing a steady 180 bbls/day. SM71 has reached project payback within the projected 12 months. OEL is drilling the second well in the Hillcorp program and preparations are underway for the drilling of the Winx-1 well on the North Slope in Alaska. We maintain our BUY recommendation with a target price of $0.10.

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Valmec - Cheap given tailwinds

Valmec LogoHeading into 2019 and the interim reporting season, we have reviewed our forecasts and valuation for Valmec. Despite heightened global concerns, we maintain a positive view on the tailwinds behind gas construction and operations services in Australia. As a result our forecasts and valuation of $0.42 are unchanged. On our numbers VMX is trading on undemanding forward multiples, suggesting considerable share price upside potential. BUY maintained.

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Swick Mining Services - Positive Trends

Swick Mining Services LogoHeading into 2019 and the interim reporting season, we have reviewed our forecasts and valuation for Swick Minings Services. The performance over the last few quarters, particularly with regard to margin, has been impressive, and has led to an earnings upgrade in this note following a strong 1Q19. A key near term risk is whether the large Newmont contract is rolled over, however our blended valuation of $0.34 ex Orexplore, and $0.40 including Orexplore (prior $0.38), provides enough upside to support a BUY call regardless of the Newmont outcome.

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SRG Global - Broader opportunities

Heading into 2019 and the interim reporting season, we have reviewed our forecasts and valuation for SRG Global. We recently updated forecasts post the AGM and guidance in November, and make no changes to our FY19 numbers. We have pared back FY20 growth slightly due to uncertainty over contract timing, but note the broader opportunity pipeline post the SRG-GCS merger suggests upside. Adjustments sees our valuation fall to $0.70 (prior $0.75);
still ahead of the current share price post its recent drop. We like the long-term potential, although acknowledge near term focus will be on integration and contract timing risks.

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SCEE - Diversification benefits

SCEE LogoHeading into 2019 and the interim reporting season, we have reviewed our forecasts and valuation for SCEE. In upgrading to BUY following the full year results in August, we noted SXE had transformed itself in recent years, substantially reducing exposure to resources, increasing its scale and diversity, and improving its earnings visibility. These attributes are such that we believe sufficient conservatism has already been built into our forecasts, and we make no changes in this update. Our blended valuation remains $0.85 and we maintain a BUY call on medium-term growth potential and a less risky business model.

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