Heading into 2019 and the interim reporting season, we have reviewed our forecasts and valuation for Pacific Energy. We recall the AGM in November was upbeat, with the Company indicating it was on track to beat the $54-55m underlying EBITDA guidance provided in August. PEA’s ability to provide and meet guidance shows the attraction of the business model, with average contract length of ~4 years on take or pay terms offering good visibility. We see no reason to adjust our forecasts for the next two years, and believe the stock is undervalued on a slightly more conservative valuation of $0.73 (prior $0.75). PEA provides lower risk exposure to mining services. BUY maintained.
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