Emeco Holdings Update

Submitted by Craig Strzelecki on 23 April, 2007 - 18:17

Emeco Holdings (EHL) has a Buy 2 broker call and a share price target of $2.30 from sharemarket analyst UBS. The analyst has observed that the business continues to perform well: At both the interim result and a recent presentation the group has indicated that the business continues to perform well. In the first half EHL generated EBITA growth of 54%. To meet prospectus forecasts requires growth in the second half of 33%. The analyst believes that EHL will comfortably meet its forecasts. Capex Remains High: In the first half the group spent $150m on equipment (inc a $9.7m acquisition), with commitments to spend a further $93m. The analyst suspects that captial expenditure for the fiscal year will approximate $300m, of which half will make a negligible contribution to earnings in fiscal 2007 due to deployment lags. Balance Sheet Sound: At 31/12/06 gearing was 48%. The analyst believes that the company could comfortably spend $300m in both 2007 and 2008 without stretching the balance sheet. They value Emeco Holdings (EHL) on a DCF basis at$2.20-2.40 per share. Our share price target is in the middle of this range.

Emeco Holdings Limited is listed on the Australian Stock Exchange (ASX) under stock code EHL. You can view their investor website here. EHL was listed on the ASX on 28 July, 2006. Alec Brennan is the Chairman of Emeco and Laurie Freedman the Managing Director. Emeco is involved in selling, renting and maintaining heavy moving equipment to customers in the mining industry in Australia and overseas. Find out the meaning of the recommendations in this primer. Browse for other broker recommendations. Check your charts and good luck with your share trading!