2009 Media Releases

July 22, 2009

Deutsche Bank initiates coverage of Boart Longyear Limited

Deutsche Bank has initiated coverage of global drilling services provider and products manufacturer Boart Longyear Limited (ASX: BLY) with a Hold recommendation.

Research analyst Philip Pepe initiated coverage with an AUD 0.22 twelve month price target.

Mr Pepe said ‘Boart experienced strong growth in FY07 and FY08, driven by rising commodity prices and expanding exploration budgets. However, we expect FY09 to be a tough year for the company given the current economic climate and forecast a decline in revenue of around 40%, resulting largely from a fall in commodity prices and a reduction in exploration spending by the junior miners.’

Deutsche Bank expects conditions to improve from FY10 onwards as exploration budgets begin to grow and the relationship between budgets and commodity prices returns to normal. He expects that given the likely fall in company’s earnings for FY09, together with existing debt covenants, the company will review its capital structure before year end.

Mr Pepe says the main upside risk to his view is that exploration budgets, and hence Boart’s revenue, decline less than he expects in FY09. Whilst the key downside risk is that revenue in FY10 and FY11 is lower than Deutsche Bank forecasts, leading to materially lower profitability.

Boart Longyear is a leading global drilling services provider and products manufacturer servicing the minerals, environmental, infrastructure and energy industries. BLY was founded in 1890 and listed on the Australian Stock Exchange in April 2007.

For further information, please contact:

Michelle Chaperon (02) 8258 1311



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