Rays of sunshine for mining services
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You just can’t expect much good news from mining services companies these days, but today is proving to be the exception for some with WDS (WDS) and RCR Tomlinson (RCR) issuing upbeat commentary during their annual general meeting today.
WDS is the standout with its stock recording the best one day gain in three-months of 8% to 81 cents after management gave an upbeat outlook and paid its first interim dividend.
Management is forecasting net profit for 2013-14 to come in between $10 million and $12 million as growth in its coal seam gas servicing business offsets weakness in its coal division.
Consensus estimates were at the lower end of the guidance range and investors also took heart that its coal services business is still profitable despite the downturn.
As previously announced, WDS has also moved to pay dividends on a quarterly basis. It said it will pay a fully franked 1 cent a share dividend for December. The stock is on a forecast yield of 7.3%.
We highlighted WDS’ potential back in August and the stock has rallied close to 40% since.
RCR also gave investors reason to cheer with the stock gaining 2.6% to $3.56 this afternoon when the S&P/ASX 200 is down by 0.8%.
RCR didn’t give a specific guidance but did say it was anticipating further growth ahead as it beds down its acquisition of Norfolk Group.
The group has enjoyed a good 2012-13 with sales up 8% to $875.2 million and net profit surging 37% to $37.3 million.
What’s more encouraging is that its current order book stands at $835 million and it has $85.6 million in the bank with no debt.
This puts RCR in a strong position to benefit from the cyclical downturn as it has the will and ability to make further acquisitions.
But not all mining service companies are basking in the afterglow of WDS and RCR. A shock downgrade by Worleyparsons (WOR) is clouding over the likes of NRW Holdings (NWH) and LogiCamms with the two small cap stocks shedding between 4% and 5%.
WDS, RCR, NWH and LogiCamms are part of the Uncapped 100.
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