Perenti's merger with DDH1 to cause near-term share price downside - Citi

Perenti

27/06/2023 01:38

** Shares of Australian mining services provider Perenti
 PRN.AX  fall as much as 2.6% to A$1.120 after Citi downgrades
to "neutral" from "buy" with a PT of A$1.25
    ** Analysts at Citi say Perenti's merger with smaller rival
DDH1  DDH.AX  will weigh on near-term share price performance on
increasing cyclicality within business amid subdued exploration
levels 
    ** Merger risks include rapid or gradual revenue
deterioration and extent of inflationary pressures and safety
performance - Citi
    ** Citi, however, raises FY24 and FY25 EBITA forecasts by
16% to A$321 mln ($214.17 mln) and 30.5% to A$369 mln,
respectively
    ** Says it no longer expects dividend to be reinstated in
FY23 and push this out to FY25
    ** "We think cautious sentiment is likely to linger given
increased cyclicality coupled with risk of gradual improvement
in exploration"- Citi 
    ** PRN down 12.6% this year, as of last close 


($1 = 1.4988 Australian dollars)

 (Reporting by Roushni Nair in Bengaluru)
 ((Roushni.Nair@thomsonreuters.com;))