MLD - MACA Ltd

[mark100]

MLD, now known as MACA but previously known as Mining and Civil Australia is a recent listing. As per the former name, its a mining and civil contractor.

The $1 shares openned at $1.40 and are now at $1.50. Tipster Roger Montgommery has been giving the company favourable mentions around the place which has probably boosted its appeal although the stock was cheap at the IPO price.

MLD is now trading at around 9.8x forecast FY11 earnings and FF yield of 4%. They claim 98% of forcast FY11 revenue is based on existing contracts and they imply that capital raised from the IPO will assist in the winning of further contracts.

EBITDA margins are healthy at 20% plus, ROE forecast to be around 36% and Net Debt/Equity is low at around 8%.

I bought some on openning day at $1.42. It's hard to buy at a 42% premium but I see earnings upside for FY11 considering they haven't assumed the winning of any new contracts when making the forecasts and the stock is still reasonably price.

[ob1kinobi]

Big step up in volume today. Buying interest seems to be picking up.

[mark100]

And here comes that earnings upside I was hoping for. Looks like they might beat prospectus forecasts by 30% plus

[soulman]

And here comes that earnings upside I was hoping for. Looks like they might beat prospectus forecasts by 30% plus

Thanks for the heads up on this one Mark. Although buying on the first month after the IPO seems the best, I managed to luckily pick some up at $2.07 on Monday this week. I sold for $2.36 Wednesday and today it closed at $2.50. Strong movement by MLD this week.

[mark100]

Hi soulman, I sold this week at 2.37 and 2.42. It had run a little too hard I thought but it unfortunately it was still strong on Friday. I'm hoping for a pullback to around 2.20 when things calm down a bit

[COLIN]

Soulman/Mark: I guess a "bird in the hand is worth two in the bush" but, as hard as I look, I can see little justification for selling at this stage. None of the technical indicators which I normally examine seem to be flashing any "sell" signals yet - until they do, I will be continuing to hold.

BUY INTO STRENGTH, SELL INTO WEAKNESS.

Of course, if you used the sale proceeds to purchase even better-gaining stocks, then well done.

[mark100]

True Colin but that's just my way of doing things and it has served me well for quite a few years now, even though there are cases where I leave profit behind. I bought the stock even after it had opened at a 42% premium because I thought there was fat in their forecasts. That has now come to light, and when I get 20% in a week and 70% in under 3 months from an industrial stock more often than not you get another bite at the cherry lower down. It's easy to say sell into weakness but small-mid caps like MLD can become rather illiquid on weakness. I like to sell when the buyers are still chasing my offer after a hard run. But hey, differences of opinion on this is what makes a market!

[mamos]

I agree with your comments 100% Mark. You have to be more active with cyclical stocks. Not simply buy and hold.

$285m contract just announced.

True Colin but that's just my way of doing things and it has served me well for quite a few years now, even though there are cases where I leave profit behind. I bought the stock even after it had opened at a 42% premium because I thought there was fat in their forecasts. That has now come to light, and when I get 20% in a week and 70% in under 3 months from an industrial stock more often than not you get another bite at the cherry lower down. It's easy to say sell into weakness but small-mid caps like MLD can become rather illiquid on weakness. I like to sell when the buyers are still chasing my offer after a hard run. But hey, differences of opinion on this is what makes a market!

[mark100]

ok I look pretty stupid now. Managed a trade from 2.55 to 2.79 in a matter of minutes but only a small quantity.

mamos, I think you might be mistaken, I can only see where its a $285m contract over 6 years.

[Footsie]

Since listing these guys have upgraded earnings, now announce a massive contract win.
Look at Matrix (MCE) or Forge.
Why would they pull back unless market has a major correction something goes wrong?

No these guys will keep going up with the good news.
I understand they are very close to two other large contracts of similar size.