re: Ann: Half Year Accounts Presentation corr... BBY research...

re: Ann: Half Year Accounts Presentation corr... BBY research comments

Miners being mean

Resource Equipment Limited (RQL) continues to suffer
from miners being mean and trimming costs. RQL may
well have the
Rolls Royce
solution for de-
watering but
miners continue to favour their in-
house systems which
still get the job done. In the
meantime RQL has been
opportunistic and has secured the distribution righ
ts to
some pumping products. This brings revenue at reduc
ed
margins. RQL remains cheap but we think it will sta
y
cheap until there are more de-
watering contract wins. In
our view this
is now a FY14 story and we think that it is
unlikely that there will be any near term changes w
hich
will improve the soft 2H13 result. We continue to l
ike
management and the recurring nature of the core
business revenue for what is a unique solution to t
h
e
growing problem of de-
watering in mines. We reduce our
12 month target price of A$0.33/sh to A$0.30/sh (NT
A)
and maintain our BUY recommendation.