What the Brokers say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe
Celamin Holdings NL (ASX: CNL)
Celamin Holdings NL is focused on the exploration and development of resource projects in North Africa, initially in Tunisia and Algeria.
The company’s immediate focus is the advanced Chaketma phosphate project (CNL 80 per cent, reducing to 50 per cent at development stage) held in partnership with local company, Tunisian Mining Services SA (TMS).
Celamin is advancing the Chaketma project with a Definitive Feasibility Study and has production targeted for early 2015.
Celamin has also acquired rights to several base metal tailings projects in Tunisia with TMS and is farming in to an Exploration Permit with base metal (lead-zinc) targets in Algeria.
The Chaketma phosphate project has quickly advanced to become a potential ‘company maker’ for Celamin and was recently the subject of a positive scoping study completed by experts Direct Mining Services Pty Ltd.
The success of this study led Celamin to proceed immediately to a Definitive Feasibility Study (DFS).
The maiden JORC-compliant Inferred resource containing 37 million tonnes at 21.0 per cent phosphate covers just one of seven prospects at Chaketma.
Earlier investigations estimated the potential for a substantial “Pre-Resource Mineralisation” of approximately 229 million tonnes at 20 per cent phosphate.
The Chaketma scoping study indicated an economically robust and viable project with a (pre-tax) US$605 million NPV, IRR of 28 per cent, capex of US$364 million, a payback of 3.5 years and a potential mine life of over 50 years on maximum output of 1.5 million tonnes per annum phosphate concentrate.
The project is located in a mature phosphate mining province and is close to existing infrastructure and Euro markets.
Strong demand for fertiliser commodities, such as phosphate, is expected to continue as a result of global population growth and the shortage of arable land for increased food needs.
Recommendation: Speculative BUY
Monadelphous Group Limited (ASX: MND)
Monadelphous Group Limited provided revenue guidance for FY13 to “be about 25 per cent” but “margins are coming under pressure in this more competitive environment.”
The company also said that 1H revenue was 40 per cent above pcp [prior corresponding period].
Guidance implies 1H revenue of $1.23 billion and 2H revenue of $1.15 billion.
Given the history of conservatism and the building momentum in oil and gas construction, we believe the guidance of 25 per cent revenue growth for FY13 is too conservative, and we have revised our estimates to approx. 30 per cent growth.
We have lowered our FY13 EBITDA margin estimate to 9.7 per cent and our NPAT estimate is now $152.3 million.
We expect a dividend of 140 cents per share (upside risk).
We expect 1H13 NPAT of $77.6 million and an approx. 65 censt per share dividend.
For FY14, we assume approx. 9 per cent revenue growth, NPAT of $156 million and a dividend of 150 cents per share (payout ratio approx. 88 per cent).
The simplicity and consistency of the MND accounts make them relatively simple to analyse.
The high returns (approx. 56 per cent ROE, 20.4 per cent ROA), low capital intensity, track record of earnings delivery, established and meaningful maintenance and infrastructure divisions (ie recurring revenue) give us confidence in near term earnings performance.
We have a fundamental valuation for MND of $23.11, which is based on MND growing top-line by 9 per cent per annum for the next five years to approx. $2.9 billion by FY17 and then maintaining that level into perpetuity.
Our Gordon growth model valuation is $28.50 including value for franking credits suggesting there is decent value for long term holders (we have reduced our DDM cost-of-equity assumption to 8 per cent).
We have a $25.44 twelve month price target which puts a large emphasis on the dividend stream from MND.
Recommendation: We are upgrading to a Buy (from Accumulate).
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice.