CCI Holdings has had a very strong twelve months after a protracted period of accounting writedowns which masked the underlying strong performance of their key business, which provides coal testing services to all the major coal miners in Australia, as well as running similar businesses in the Ukraine and Indonesia.
Their outperformance looks set to continue, with a recent t/o bid from CPB falling well short of what the board considers the stock to be worth. Profits in CCI have always been sensitive to export coal volumes. The next 2 years will see the steepest rise in coal exports ever recorded in Australia
So there is 1. Unprecedented growth, 2. Takeover activity and 3. The perception the company is about to return to dividend payment after a period of debt reduction and restructure. All those factors point to a rising shareprice. With the benchmark for mining services stocks being P/E ratio's of 20+, and the likelihood of 06/07 earnings being in the vicinity of 4cps, the stock looks set to head towards 80c during this FY, from it's current underpriced level......there's still time to get on board for the upside to come....
CHL Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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