Top Gainer: Macmahon (MAH)

 Closing price  $0.63
 Change  +0.045
 % change  +7.7%

 

After hitting its lowest point last week since 2005, Macmahon Holdings (MAH) has rocketed 32.7% in just five trading days. And all this amidst a profit report that showed a 97% fall in net annual profit to just $1 million! It has been a rough couple of years for long-term shareholders – post-GFC the company has lost two-thirds of its value.

However it seems investors are pleased with CEO Nick Bowen’s comments about the outlook for the company when reporting the massive drop in profit on Tuesday. Bowen said that the company had worked hard to try and overcome its disappointing first half results and that the company’s outlook was positive. “Macmahon’s order book is now at a record level of $2.8 billion and there is a very strong pipeline of work,” he said. Macmahon has also won preferred contractor status to construct the first stage of $300 million Solomon Rail project for Fortescue Metals, which will add $200 million to secured revenue for 2012. Bowen stressed that the company would deliver improved profits and returns in this coming financial year.

MAH is a leading Australian construction and contract mining company that has been operating for more than 45 years and has over 3,000 employees, with major projects in Australia, NZ, South East Asia and Africa. The Company’s construction capabilities cover road, rail, marine, water, and resource infrastructure.

Patersons Securities Analyst Kien Trinh favours Macmahon based largely on relative P/E rankings, earnings and sentiment indicators, however it is difficult to find other analysts bullish on the mining services company. Having said that, the blowout in costs and 97% drop in profit is unlikely to be replicated, so this may well be an opportunity to pick up the company before it turns things around.

 

 

Chart: Share price over the year to 17/08/2011 versus ASX200 (XJO)

Stock code: MAH

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