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    MIN / IPG

    Two stock question here. Holder of IPD Group (IPG) from shortly following the IPO, MM views on IPG seem to have been few and far between. The FY24 results were a beat to expectations and prior guidance from the company. Will it trade positively moving forward in line with SXE noting SXE is professional services vs IPG a distributor of products that businesses like SXE may use. Would you continue to hold IPG Been a long time shareholder of MIN and Chris Ellison fan boy of sorts but with a heavy heart sold out in May (timed perfectly in hindsight). Keen to re-enter the stock, at around $32 does this represent an accumulation zone...my concern is all about balance sheet risk but I do see in a 2-3 year time frame commodity prices should turn and provided the mining services division holds them through this tough period it should be trading much higher in a few years time.

    Answer

    Hi Scott,

    Two stocks with different performance over recent times:

    IPD Group (IPG) – this electronics business tested its all-time high this week with a solid upgrade following its recent report, from Bell Potter to a $6 target. The outlook for IPG’s markets remains buoyant, driven by the transition to renewable energy, increasing demand from data centres and their energy requirements, the growing number of EV chargers, and a supportive legislative environment.

    • We believe IPG is a high-quality business with strong growth prospects, ample cash generation, and a solid balance sheet. It may take time to punch through $5 but it looks good following a solid earnings report.

    Its a lower Beta stock than SXE which is likely to underperform in strong periods and vice-versa. However, both look good in the medium-term.

    Mineral Resources (MIN) – we believe MIN will be trading higher over the coming years and the current sharp drop has accelerated with MIN becoming a proxy to short lithium (Li) with the added bonus of a potential capital raise as Chris Ellison fights to shore up a stretched balance sheet. If we had no position we would be buying the current panic selling leaving some $$ to average given the strong downside momentum. MIN is leveraged in several ways, and one of those is via Mining Services. Because it does most things in house, when they reduce growth spend, it also has a negative influence on their services business. i.e. when things are going well, this model outperforms, but the opposite is true when things are under pressure.

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    IPD Group Ltd (IPG)
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