Morgans initiates coverage of MLG Oz with a $1.08 target and a Hold rating, while awaiting greater visibility after recent setbacks in the crushing business. The company is an integrated provider of key mine site, haulage and logistics services to Australia’s mining sector.
MLG Oz operates from 29 sites in WA and the NT and services more than 15 resource sector clients in the gold (82% of FY20 revenue), iron ore (14%) and nickel sectors (4%).
The company leverages its strategic asset base to offer five revenue streams under a single, reliable and safe delivery model, explains the broker. It’s considered the length of client relationships and consistent scope increases illustrate the strength of its service offering.
The analayst cautions falling prices for gold, iron ore and nickel can impact client profitability, reduce production volumes and ultimately, lower the demand for the company’s services.
Target price is $1.08.Current Price is $0.94. Difference: $0.14 – (brackets indicate current price is over target). If MLG meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
