Observations & Notes:

·        FCF of $6.8m for Q2 and $13.0m for H1 on a market cap of A$75m. Current price is 3 times FCF if you annualise H1.

·        Net debt of -$8.4m in June is now a net cash of +$7.2m ($15.5m cash, $8.3m debt).

·        Board meeting in February to discuss capital management and will update with half year accounts, noting it now has $5.2m in franking credits which would allow for a 2.4c fully franked dividend and leave the company in positive net cash.

·        1H26 EBIT of $10.2m Vs -$0.5m loss PcP, includes a $1.4m non-cash impairment for the destruction by fire of a rig which they expect to get at least $1.4m via insurance but will book the insurance once is unconditional.

·        Higher number of shifts 1H26 Vs PcP of 6% due to improved weather, absence of client initiated delays and scope decreases.

·        1H26 result was using only 62 out of 90 rig’s, hence significant additional capacity.

·        Demand in the copper and gold sector is positive while coal is subdued.

·        Loop Decarbonisation business building with Customer two executed a contract and interest from others for initial advisory services.

Comment

Following flat FCF from FY25 mainly due to a poor H2, MSV has now shown a very strong return to high FCF in 1H26 driven by increases in shift numbers but on flat rig numbers. However shift numbers and rig use remain 10-20% below rates achieved 2021-2024, so there is a lot of upside potential on what is currently a very solid EBT and FCF performance.

I had an order sitting in to top up at 30c, but it looks like I am going to have to review that if I want any more because it is hard to see it return there any time soon…

Disc: I own RL