Bell Potter maintains MZI buy recommendation
Bell Potter has described mineral sands producer, MZI Resources’ current position as an ‘inflection point’ as the company ramps up production at the Keysbrook project in Western Australia.
Bell Potter said the production results for the December quarter were 17% ahead of the September quarter, but the broker saw the record production of MZI and its highest value product, L88 (leucoxene) as the key takeaway.
Production was in line with Bell Potter’s expectations with the broker describing the performance as a ‘comfortable beat’ and an endorsement of the higher value mineral assemblage being processed.
However, fiscal 2017 will still be a year of transition for the company with Bell Potter forecasting a loss of $9.1 million prior to recording its maiden profit of $14 million in fiscal 2018, representing earnings per share of 7 cents.
As this implies a conservative PE multiple of 4.3, Bell Potter has maintained its buy recommendation and only slightly lowered its 12 month price target from 53 cents to 50 cents, representing a premium of nearly 70% to MZI current price.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.