25/02/2009 - 22:00

Macmahon fall boosts director’s gain

25/02/2009 - 22:00

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MACMAHON Holdings director John Massey has seized on the company's declining share price to bolster his interest in the stock, a day after the release of a subdued interim report.

Macmahon fall boosts director’s gain

MACMAHON Holdings director John Massey has seized on the company's declining share price to bolster his interest in the stock, a day after the release of a subdued interim report.

Mr Massey bought $19,888 worth of Macmahon shares priced at 33.1 cents each, a slight premium to the company's closing price that day, February 19, of 32 cents.

It was the first movement in a director's interest in the company for more than three months, with Vyril Vella buying $161,148 worth of shares in early November when Macmahon's share price fell sharply from $1.17 to 43.5 cents.

Mr Massey's transaction comes a day after the company reported a 40.5 per cent fall in its interim net profit to $14.1 million due to the timing of settlement claims and variations to construction contracts.

Macmahon also took a $1.4 million hit from its failed takeover attempt of drilling contractor Ausdrill, which ended in late September and started the company's decline from an average share price beforehand of $1.60 to an average now of about 35 cents.

While its languishing share price may be of concern for shareholders, analysts from broker firm Hartleys have retained its 'buy' recommendation for the company, saying the stock is "cheap", especially on a net tangible asset basis.

"[Macmahon] fits the criteria we look for in the sector ... cheap," Hartleys analysts said.

"[It] has a through the cycle business model (ie should have a positive NPAT [net profit after tax] margin in economic booms, downturns and normal times), and doesn't have any near-term liabilities that we are concerned about."

The current economic downturn has also prompted analysts to cut the company's full-year earnings forecast for the 2009 financial year to $32.2 million.

Macmahon, which has cut its fiscal 2009 guidance for the third time, expects a net profit of between $40 million and $44 million, subject to weather conditions in Queensland. Previously, the company had provided a guidance of $48 million.

Hartleys has valued Macmahon at 86.4 cents and forecast a 12-month price target of 60.1 cents.

Macmahon's order book is currently at $1.94 billion, with 50 per cent of that filled by government contracts and 27 per cent with BHP Billiton and Rio Tinto.

Top shareholders in Macmahon are Leighton at 17 per cent and Barclays Group at 7.4 per cent.

BAUXITE RESOURCES

BAUXITE Resources non-executive director Neil Lithgow was the week's biggest spender as he exercised more than 1 million options in the money.

Mr Lithgow exercised $215,000 worth of options at a price of 20 cents apiece at a time when the company's share price closed at 24.5 cents.

Despite the addition of a significant parcel of shares, Mr Lithgow's interest in the company has been diluted as others also sought to exercise options, including fellow director Robert Nash, who added a further 20,000 shares to his stake, taking his total held securities to 224,900.

Mr Lithgow's shareholding has been reduced from 16.97 per cent to 14.73 per cent or 14.36 million shares.

Bauxite has 56.34 million shares on issue.

NORTH AUSTRLIAN DIAMONDS

ASCOT Securities managing director and North Australian Diamonds director Ian Hastings has been allocated 80 million options as payment for services related to a drawn out capital raising.

The raising had been disputed by 13 per cent shareholder Anglo Pacific Group, which deemed the original $6 million capital raising amount as too low. Following the settlement of legal proceedings, North Australian Diamonds agreed to raise a further $500,000.

Mr Hastings' options are exercisable within three years from the date of issue at 0.8 cents each, with half subject to a voluntary escrow period of six months and the remainder escrowed for 12 months.

 

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