We are optimistic about the outlook for mining over the medium term and when the sector does well, the service providers benefit. ANG engineers & manufactures things to help mining companies operate more efficiently, and while this is not a stock we own (yet), it is on the Hitlist for our Emerging Companies Portfolio. Last week shares fell ~20% after downgrading profit guidance by 25%, though the new guidance includes the contribution from Mainetec, a business they acquired around 9 months ago. The downgrade stemmed from their Perth business unit which was expecting to deliver on a contract before year-end before the order was delayed. As a result, much of the fixed costs associated with the contract will be booked this year, while the revenue won’t land until 1Q24. The other business units are progressing well with revenue growth coming through and margins improving as a result.
- We see ANG as oversold given the share price decline was harsh relative to the downgrade.