The mining services business rallied yesterday on news of a big contract win, but also on the back of a bullish strategy update that caught our attention. The $520m, 4 year deal with Evolution Mining (EVN) to operate their Cowal gold project in NSW is material in the scope of a $2.2b revenue business. The strategy update had them targeting 10% EBIT(A) margins while the market is predicting closer to 8% for the next few years. There has been plenty of talk about inflation so it was brave from our point of view for a labour heavy company to talk about any sort of margin expansion in the near term. If they can execute, Perenti is cheap trading on sub 6x earnings and is the sort of business that will benefit from a potential commodities ‘super cycle’.
MM has added PRN to our Emerging Companies ‘Hit list’ ~76c
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