My reasoning is that the sheer body of work out there means contractors with machinery and trained leaders should be able to offset increased wages and other costs by passing them on to the clients (who are all taking major benefit from increased mineral prices.)
Back in October Bridget Carter at the Australian wrote MACA was for sale … or at least that was the implication in her story of October 31 that headlined that CIMIC was thought to be doing due diligence. [read the story]
The rumour has been around a long time and, I think, first surfaced last July;
Maca a takeover target amid surge in price of commodities
Maca only generates about 6 per cent of its revenue from the coalmining industry, which is out of favour with investors.
Maca is coming under focus as a takeover target, according to industry sources.
The mining services provider’s stock price is hovering around 84c after trading at more than $1 in 2019, with its market value at about $287m.
An attraction for a prospective suitor of Maca is that commodity prices are soaring and most in the market see the business as undervalued.
It only generates about 6 per cent of its revenue from the coalmining industry, which is out of favour with investors.
The majority of its revenue comes from other types of mining, where it generates 61 per cent, and 24 per cent civil construction, an area set for growth in the years ahead at a time when the government is set to increase spending on infrastructure construction.
The remainder is from infrastructure maintenance, crushing, international mining and its Maca Equip business.
The situation comes as analysts believe scrip mergers make sense for the sector, which needs to consolidate as major listed players in the industry see their market values languish.
One logical buyer of Maca would be Thiess, owned by listed industry heavyweight CIMIC and US-based fund Elliott Management, which is said to have aspirations to consolidate the mining services sector in Australia.
There had been talk earlier that Elliott was keen to list its interest in Thiess, but first wanted to embark on acquisitions to reduce the proportion of revenue it generates from coal.
Maca’s earnings are largely generated from precious metal miners, with earnings before interest, tax, depreciation and amortisation at $69.6m for the six months to December.
One challenge for any Maca buyer, analysts say, is that its revenue is made up of a large number of small contracts to mining projects, and some can be marginal, creating payment risks should a project collapse.
Another company in the spotlight in the sector is Perenti, which has a $584m market value despite generating about $400m of annual earnings before interest, tax, depreciation and amortisation.
Others trading at low valuations include Emeco and Downer.
Source say that any suitor interested in Downer would want to see the company’s full-year results delivered in August before making a play for the business.
Maybe - if there is a potential buyer out there they were waiting on Bluff and Mining West financial business to be legally concluded?
Bridget has been right before and my hopes that there will be a takeover at a higher price has kept me holding my MLD stock …
But if so when and at what price?
