MIN – Macquarie rates the stock as Downgrade to Neutral from Outperform
Mineral Resources has been unable to agree on terms of a scrip offer for Aquila Resources ((AQA)). AQA’s chairman will accept Baosteel’s bid for his 29% holding and MIN will decide whether to also sell its 13% AQA holding to Boasteel, losing $20m in the process.
MIN can handle the $20m but it is the loss of reputation which will hurt most, the broker suggests. Boasteel had threatened to take its ball and go home, providing no support for the West Pilbara Iron Ore unless its bid succeeded, and the WA govt is very sensitive about the accompanying port project.
The broker has slashed its FY15 earnings forecast, including an adjustment for the week iron ore price. Target falls to $9.94 from $13.97 and rating downgraded to Neutral.
Sector: Commercial Services & Supplies.
Target price is $9.94.Current Price is $9.35. Difference: $0.59 – (brackets indicate current price is over target). If MIN meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).