12/12/2007 - 22:00

Strong returns in mining services

12/12/2007 - 22:00


Save articles for future reference.

The mining services sector has been the place to invest in the past year.

Strong returns in mining services

The mining services sector has been the place to invest in the past year.

Since October 2007, there has been a flurry of engineers, drilling groups and mining infrastructure and construction companies floating on the Australian Securities Exchange; and they’ve delivered handsome returns for investors.

This week, electrical engineer LogiCamms Ltd was the latest to join its colleagues in lighting up the boards of the ASX.

Investors in LogiCamms’ $10 million initial public offer doubled their money when the stock debuted on Tuesday.

LogiCamms shares raced to $2, before closing at $1.47, a 47 per cent premium to its $1 issue price and raising its market capitalisation from $28.6 million to $42 million.

Fellow electrical services contractor Southern Cross Electrical Engineering Ltd has maintained its solid performance since debuting on the stock market about a fortnight ago, with its shares trading at $1.65 this week, 65 per cent above its $1 issue price.

The big winner has been Frank Tomasi, who founded Southern Cross almost 30 years ago and retains a controlling shareholding in the company.

Meanwhile, in the space of a week, shares in mining and civil contractor, Brierty Ltd, have nearly doubled, soaring to $1.80 on Tuesday, up 80 per cent on its $1 issue price.

The company’s sharemarket debut last week came hand-in-hand with an announcement it was in negotiations to buy another civil contracting business, Wormall Pty Ltd, as it looks to continue its growth.

Brierty follows in the footsteps of mining services group Mineral Resources Ltd, which floated in July 2006 and has had its share price head north ever since.

On Tuesday this week its shares closed at $5.60 – a gain of 387 per cent in 18 months from a closing price of $1.15 on debut.

Investors in drilling group Swick Mining Services have done even better, with its shares closing at 32 cents on debut in October 2006 and at $1.80 on Tuesday this week, delivering a gain of more than 460 per cent.

Analysts predict more mining services companies are likely to offer up shares to the public in a bid to capitalise on the stock market’s health appetite for the sector.

Bell Potter Securities head of wealth management Heather Zampatti said mining services companies were enjoying the spoils of a booming resources sector.

“We think the resources sector will stay strong for quite a while,” she said.

“And BHP Billiton making its bid for Rio Tinto shows they think it is going to be strong for a long time too. If ever there was a time [for mining services] now is the time.”


Subscription Options