Mineral Resources delivers again

Livewire Equities

Midcap miner, Mineral Resources, has been on a run in recent months and is spiking again following strong results last week. Livewire contributors highlighted the stock several times ahead of this move. In this wire, we review what they were saying, and see what the results suggest for the path ahead.

Source: CMC Markets

We reached out to Romano Sala Tenna from Katana Asset Management to comment on the results:

“Mineral Resources Limited (MIN) reported a strong result for the 2017FY with revenue up 24%, EBITDA up 70% and underlying profit up an impressive 110% to $218m. Not surprisingly, the stock price has rallied solidly; up by nearly 60% over the past 2 months. The result surprised many in the market, who were overly fixated on the weak iron ore price and its impact on MIN’s Iron Valley joint venture. However, the two key things investors had failed to recognise was that:

  1. MIN is now the largest contract crusher globally and earns a margin on each of the 126m tonnes (and growing) it crushes for clients annually
  2. MIN has been working tirelessly to develop an alternative earnings driver to iron ore through the Mt Marion spodumene and Wodgina DSO operations, making it the largest producer of lithium worldwide.”

Ahead of this move, Romano provided a compelling overview of Mineral Resources, arguing it could become the world’s largest supplier of lithium and was on track to post an EPS double that of FY16: (VIEW LINK)

We have also had positive calls on the stock from Foster Stockbroking, who made a bullish case for the stock with a target of $16.08: “We view the company as attractively valued considering the company generates significant cash at current iron ore prices, while the market is ignoring considerable upside opportunity in the form of Wodgina Lithium DSO". (VIEW LINK)

And earlier in the year, Regal Funds singled out Mineral Resources as a stand out: "Lithium prices also continue to rally to new cyclical highs, with few signs of this price strength abating, driven by the emerging yet undeniable demand for electric vehicles (lithium is a key component of lithium ion batteries), which again claims China as the key demand driver. MIN therefore appears ideally positioned to deliver one of the largest profit increases of any ASX 200 company this year, and we suspect its pattern of beating guidance will again be demonstrated come full year results time in August." (VIEW LINK)


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