Investors took the long handle to a couple of stocks yesterday - vitamins group Blackmore’s was one; heavy equipment hirer, Emeco Holdings was another despite producing a $12 million profit for the six months to December.
The latest updates from the Australian mining services sector indicate production-related activities domestically have seen little virus impact while internationally is mixed, the broker notes. Exploration and non-essential activities are nonetheless more likely to be curtailed. But in particular, iron ore and gold operations in WA are noted as being very strong.
First-half results were pre-released and the main new item in the financials was the growth guidance from the PnP acquisition. This contributes to a lift in Morgans' FY20-22 operating earnings estimates of 3-10%.
Morgans observes the completion of contract mining operations (lower margin) was the driver for increased profitability in the second quarter. Operating earnings were up 15%, at a margin of 43% versus a margin of 35% in the first quarter.