Broker Recommendations for MAH RBS Australia 21-Aug-12...

Broker Recommendations for MAH
RBS Australia 21-Aug-12 Underlying profit growth was strong in RBS's view and while guidance for FY13 is solid the broker suggests some margin improvement will be required for targets to be achieved.

Minor changes to forecasts see price target fall to $0.80 from $0.82. There remains upside from offshore expansion moves and this supports the broker's Buy rating.
Buy
Macquarie 21-Aug-12 Target $0.77 (was $1.01). The FY result was pretty much in-line with the broker, who notes margins improved and cost savings post a construction review also helped on the earnings line.

The order book and pipeline are strong, says Macquarie, who also notes the balance sheet is in good shape. The Outperform call is maintained, with the broker positive on the outlook for the mining division and seeing potential upside in the Civil division. The price target slips on peer-derating.
Outperform
UBS 21-Aug-12 Target $0.90 (was $0.95). FY profit was in-line with guidance and the broker, with slightly short earnings and higher interest costs offset by a lower tax rate.

FY13-15 earnings forecasts are lifted by around 10% post the result to reflect a ramp up in new contracts and tender pipeline conversion. The broker thinks the stock is fundamentally undervalued by the market and maintains its Buy call, expecting a re-rating not too far down the line.
Buy
Deutsche Bank 21-Aug-12 MacMahon's result missed consensus. While margins improved in mining and construction given a frenzy of activity they did not improve by as much as the broker expected.

The problem for MAH is that uncertainty is now leading to a reassessment of new expansion plans from the resource sector. This is reflected in the broker's earnings growth forecasts which suggest 18% in FY13 on the current pipeline but only 1% in FY14.

Target falls to 73c from 85c and Hold retained on a fair price.
Hold