Mining maintenance contractors?

[Austravel]

Hi,

Trying to put together a list of contractors used by mining/resource groups. Ie most mines and related groups now primarily use contractors for service, maintenance, minor upgrades to their existing equipment and infrastructure. I know some are getting huge contracts but aren't listed on the ASX.

There must be some out there that are listed and possibly good value. These guys should be ok even during a correction. To a degree that is, only because many sites now have very small permanent staff and contract out all the above work.

Any ideas of some to look at?

 

[son of baglimit]

austravel - dont ignore the LNG projects expected to go ahead in the next few years - tens of billions to be spent, and while overseas based offshore engineering firms will probably get the lions share, several australian companies, either purely offshore oriented (NMS,MRM) and those with offshore segments (WOR) will get significant share.

 

[Speewha]

Hi,

Trying to put together a list of contractors used by mining/resource groups. Ie most mines and related groups now primarily use contractors for service, maintenance, minor upgrades to their existing equipment and infrastructure. I know some are getting huge contracts but aren't listed on the ASX.

There must be some out there that are listed and possibly good value. These guys should be ok even during a correction. To a degree that is, only because many sites now have very small permanent staff and contract out all the above work.

Any ideas of some to look at?

Hello,
Have a look at MAH they are one of the small players in this field, LEI are a much larger player. LEI have a large holding in MAH, so suppose LEI would give you exposure to MAH. They both do mining and non mining contracts and both should benefit from the large sums mooted to be invested on infrastructure in Australia in the coming years.

MAH are due to report this week so you can have a close look.

These are not recommendations, you need to do your own due diligence

Hope this helps

Regards

 

[Austravel]

Thanks just found some more: NOD, MND, FWD.

 

[orr]

You might want to run your ruler over AJL. Or in their case it might be more apt to have a look down their hole.

 

[anon]

DOW Downer-EDI is a big one and looks like getting bigger. Only to-day announced a $400 mill. contract with BPH in Queensland.

anon

 

[anon]

Just remembered another big one - UGL The United Group.

anon

 

[CAB SAV]

Hi,

Trying to put together a list of contractors used by mining/resource groups. Ie most mines and related groups now primarily use contractors for service, maintenance, minor upgrades to their existing equipment and infrastructure. I know some are getting huge contracts but aren't listed on the ASX.

There must be some out there that are listed and possibly good value. These guys should be ok even during a correction. To a degree that is, only because many sites now have very small permanent staff and contract out all the above work.

Any ideas of some to look at?

Check out thread, & posts titled Picks & shovels,some are better value than the companies they contract to.

 

[son of baglimit]

considering the reporting season has delivered some great results & forecasts to these companies, does anyone have, or expect to see brokers upgrading these companies or the various sectors they belong too ?

 

[son of baglimit]

http://www.argonautcapital.com.au/documents/080423 Resource Services Book Final Compr.pdf

now this should help - detailed info of a number of related companies, plus further info on other matters for mining services.

dated april 2008.

 

[allserv]

Hi there
Hubby works in the mines/maintenance and yes you've got alot of the names.TSE transfield also does maintenance in the mines and the refineries. For other ideas do a search on Seek or Careerone for engineers, fitters in Mining and even use "shutdown" as a keyword to look at the names of the firms recruiting.
allserv

 

[son of baglimit]

http://www.smh.com.au/news/investme...1220857453930.html?page=fullpage#contentSwap1

Ground force
September 10, 2008

Resource-services companies are forecasting strong growth ahead.

It is not only investors in mining and energy stocks who have reaped huge rewards from the resources boom. Some of the biggest gains have come from investments in the shares of mining contractors and other resource-services companies.

WorleyParsons, which provides engineering services to oil and mining companies, rewarded its shareholders with an annual average return (dividends plus capital gain) of 69 per cent for the five years to early September, despite this year's sharemarket declines. For Monadelphous, which provides construction and maintenance services to mining companies, the figure was 81 per cent.

The just-concluded results season showed that for many of these companies, the boom seems to go on and on. Yet amid the good news came some warnings.

Perhaps the most stark was from mining company BHP Billiton, which cautioned that its growth was increasingly being hampered by equipment stress, labour shortages, equipment shortages, significant cost pressures, energy and power constraints, infrastructure bottlenecks and more.

As a consequence Monadelphous was just one of several resource services companies to warn that, despite strengthening demand for its services, most of its projects were experiencing delays, due to industry-wide capacity constraints.

Most economists and other pundits are forecasting that demand for Australian resources will remain at a high level for the foreseeable future. But can the resource-service companies continue to benefit in an environment of rising costs and capacity constraints? Analysts generally remain positive, yet some are sounding warnings that a slowdown could be ahead.

"The recent results from across the sector were pretty positive," says Ian Christie, the director of research at Argonaut Securities. "But I think, more importantly - and this is what to me makes the resource-services sector stand out compared to many other subsectors - is that when you are looking forward to financial year 2009 and potentially even to financial year 2010, you see very few sectors that are forecasting such strong levels of continuing growth and at high margins.

"Also, there is a very positive feeling out there among a lot of the contractors. Not too surprisingly, they still benefit from the huge investment that is going into the whole resources sector, yet they don't face the same immediate impact as do the resource companies themselves from the decline in commodity prices.

"So they are in the right environment, exposed to the right sector, which, as you know, we have seen a huge amount of investment in, despite what has happened to commodity prices, with margins maintained and pretty strong growth looking ahead."

However, he concedes that capacity constraints are a concern. "If you had to pick the key constraint, it would be labour," he says. "So that is a negative on growth. I think it is pretty much across the board, whether it is marine services or drilling services or engineering or whatever. Skills are hard to come by and getting more expensive as well.

"Obviously any contractors who are locked into fixed-price contracts are going to face a tougher time than those with contracts with rise-and-fall provisions, where the costs can be passed on. I would say it has been a general trend among contractors to move towards variable price contracts, where they are able to pass on their costs."

Chris Chong, an industrial analyst with DJ Carmichael, has been looking at the results of this sector. "What I am seeing - and this is a bit of a surprise - is that margins have actually been improving. It [shows] that the companies have been able to pass on their costs to their clients, the resource companies, even in this high-cost environment. That is a big positive.

"Despite the variation in commodity prices, all of them are still seeing strong demand for their services."

He notes that many of the resource-service companies are working to avert a possible future slowdown in demand by diversifying into new businesses and new regions of the country.

Tony Lofthouse, the head of research at Hogan & Partners Stockbrokers, is less optimistic than some other analysts on the outlook for resource companies and those servicing them. "At the moment the market has been very buoyant for them," he says. "But with the credit crunch and falling share prices, it will become much harder for some companies to raise capital. I think there could be a contraction over the next 12 months."

Andrew Muir, a resources analyst with Hartleys, believes that any resources industry slowdown might actually help some of the service companies with their labour problems.

"There may be a freeing-up of some professionals. That is definitely the case already within resource companies. I am not sure how many of their skills will be transferable to the mining service providers but I would expect some flow-through," he says.

Trent Barnett, a senior industrials analyst at Hartleys, believes mining services companies are attractive to investors as they provide a degree of clarity on their earnings outlook one or two years ahead.

"I am a bit concerned on a three-year view," he says. "The key thing is the credit crunch is not just a credit crunch. It is also an equity crunch. For a project where the company doesn't actually have the capital to do it, it is getting harder to [raise]."

Share picks

Ian Christie and Trent Barnett recommend Mermaid Marine Australia, which is Australia's largest provider of services to the offshore oil and gas industry.

In addition, Christie describes as "particularly undervalued at the moment" Nomad Building Solutions, which makes portable accommodation for the resources industry.

He also recommends Imdex, which provides drilling products and services.

Barnett recommends another portable accommodation provider, Fleetwood, along with two engineering contractors that provide support services to the mining industry, Macmahon Holdings and RCR Tomlinson.

 

[experttipps]

Skilled SKE ???

 

[Miner]

Please add Monadelphous (listed in ASX) a very promising maintenance and EPCM contractor

HWE (a part of LEI now ?) - Henry Walker Eltin