Capital’s transition to full services miner, says Berenberg13 Jun 2023 11:32
Mineral drilling solutions group Capital (CAPD) is growing its contracts as it continues its transition into a full services mining house, says Berenberg.
Analyst Richard Hatch retained his ‘buy’ recommendation and increased the target price from 166p to 170p on the stock, which was trading up 7.3%, or 7p, at 103p.
It has won a contract from a subsidiary of tier-one Australian miner Fortescue Metals that builds on its existing three-year diamond drilling contract and ‘is a good example of how Capital can grow its presence on a site and add additional services by starting with its core business – drilling’, said Hatch.
‘When we initiated on Capital in 2020, it was predominantly a driller with ambitions to grow and diversify its business,’ he said. ‘Since that point, it has moved into, and now grown, its contract mining business, and also added additional growth through its [mining analysts] Msalabs business, which offers attractive continuing top-line growth.’
The award of the latest contract shows ‘further growth and diversification for Capital’s revenue streams’, added Hatch. ‘If Whitbread can cash them in at a fair price, it could driver higher returns.’