bby - research

Research Summary
Mastermyne Group (MYE) reported an FY12 result that was in line with guidance provided on 18 June 12. The standout in the result was the strength of MYE’s order book, despite the challenging environment for coal. Even without any new contract wins MYE should be able to achieve ~90% of our FY13 revenue forecast. This highlights the resilience of MYE’s business model - it targets brownfield expansions at low costs mines and the majority of its work is recurring. We have made some moderate downward revisions to our forecasts as greenfield work is likely to be scarce in this environment and MYE’s margins have come back to be more in line with industry peers. However, at these levels we believe MYE has been oversold. We maintain our STRONG BUY recommendation and lower our target price from A$3.20/sh to A$2.70/sh (11x FY13 PE).