Imdex (ASX:IMD) are a leading global mining equipment, technology and services (METS) company. Their solutions improve the process of identifying and extracting what is below the earth’s surface for drilling contractors and resource companies.
One of Imdex’s (IMD) businesses is providing chemicals known as mud for drilling holes in the mining and energy sectors. Along with strong recent demand, Imdex has the added attraction of a low cost base for its operations in these sectors.
Western Australian-based Imdex (IMD) provides drilling products and services to the minerals and oil and gas industries both in Australia and overseas, in particular supplying drilling fluids and down-hole instrumentation.
The interim result contained the company’s first quarterly loss, in CIMB’s recollection. The seasonal slowdown came earlier than expected and aggravated weak market conditions. CIMB thinks the stock will stay under pressure in the medium term. Nevertheless, longer-focused investors are advised that there is clear value in this name and latent leverage in the business.
Imdex’s quarterly shows the company is rocketing along on leverage to the mining exploration market, the broker notes, and there are no signs of slowing just yet. The broker has increased FY12 forecast earnings by 7% but is maintaining a conservative approach, noting IMD is an early-cycle play and global uncertainty overhangs.
While the company is enjoying the benefits of its expansion over the past couple of years recent price gains are enough for the broker to downgrade its rating. This is despite sizable increases to its earnings estimates in coming years. Sector: Materials.