Perenti Global Limited

PRN Details

This report is the updated version of the report uploaded on 7 June 2022 at 3:20 PM GMT.

Material Updates: Perenti Global Limited (ASX: PRN) is a diversified mining services firm. It operates divisions of surface mining, underground mining, and mining support services in Australia.

Recent Material Updates; (Analysis by Kalkine Group)

Key Highlights of 1HFY22 Results (Ended 31 December 2021): The below chart depicts growth in key metrics led by ramp up of new projects and contract extensions in 1HFY22. 

Growth in Statutory Results; (Analysis by Kalkine Group)

Key Risks: The company faces commodity price and demand changes, stringent environmental regulations, a tight labour market, and inflationary pressures.  

Outlook: PRN expects to deliver ~$2.4 billion in revenue backed by new project awards, a robust tender pipeline, and an in-hand order book.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of PRN gave a positive return of ~10.07% in the past month. The stock has a 52-weeks’ low level of $0.625 and a high level of $1.048. The stock has an immediate support level of $0.625 and an immediate resistance level of $0.900. The stock has been valued using the P/E-multiple-based illustrative relative valuation method and arrived at a target price with a correction of a low double-digit (in % terms). The company might trade at a slight discount than its peers’ median P/E multiple, considering a hight-to-debt equity ratio and continuing COVID-19 risk of a tight labour market. For this purpose of valuation, a few peers like Emeco Holdings Ltd (ASX: EHL), NRW Holdings Ltd (ASX: NWH), DDH1 Ltd (ASX: DDH), and others have been considered. Considering the current trading levels, decent returns in the past months, volatility in the market, an indicative downside in valuation, an associated key business risks, we give a ‘Sell’ rating on the stock at the current market price of $0.855, as of 7 June 2022, 11:10 AM (GMT+10), Sydney, Eastern Australia. 

PRN Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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