According to Dominic Rose analyst with Fosters Stockbroking, Industrea - a global provider of integrated mining products and services is the best ASX industrial for leverage to Chinese growth.
In the first four months of financial year 2009, Industrea announced around $40 million of new product sales into China. Much of this was repeat business with Chinese mining majors for the company’s ‘best of breed’ IME underground longwall chock carriers, AMT directional drilling and methane gas drainage systems.
Efforts by the Chinese Government to drastically boost mine-site safety, says David Shearwood of Atom Funds Management also bodes well for the company’s GPS safety technology designed to track vehicles underground. He says what differentiates Industrea from traditional mining contractors is the repeat consumables revenue stream - now comprising around 20 percent of product sold through its China-based distribution arm.
Trading on a significant discount to its peers on a P/E of 8.2X, Shearwood says Industrea looks decidedly undervalued at current levels (42.5c), and expects it to gravitate slowly towards his target price of 90c over the next 12 months.
IDL Price at posting:
47.0¢ Sentiment: None Disclosure: Held
