Thursday 29th June 2023: FY23-Guidance-Update.PDF

MAH closed today up +19.23% @ $0.155 on the back of this update.

They are coming off a low base. They closed at 12 cents/share earlier this month (6th June) and prior to today's move, they hadn't been above 13.5c/share since mid-May.

I rang Mick Finnegan up earlier this week and told him he better get something positive out there quickish-like, coz MAH was one of my three stock picks in the Strawman.com "FY23 Stock (Company) Picks" Forum and FY23 finishes on Friday (tomorrow), so it would be handy if they don't finish the FY on their lows. And he waited until Thursday!!

OK, I did not make that call. Mick doesn't know me or care what I think. But his remuneration includes incentives, and that also goes for other senior management personnel at Macmahon, and those incentives have to be earned, and one of the main hurdles that has to be conquered to qualify for the biggest incentives is achieving decent TSRs - Total Shareholder Returns - which includes share price gains/losses added to dividends and any other payments made to shareholders. Mick and the other KMP at MAH haven't been earning much in the way of incentive payments (either cash or shares) over the past couple of years, mainly because their TSR's have been dismal. It would be nice if today's guidance and business update could be the trigger that starts a share price turnaround/uptrend... Wishful thinking?! A +19.23% SP rise in one day is a good start, but they do need to keep rising from here.

It's in their interests to achieve much better TSRs for us shareholders, both because (a) they are also shareholders, and (b) because the incentive structure of their remuneration arrangements depends on it (for the incentives to be paid).

Steve Johnson, of Forager Funds, when talking about Macmahon's overly generous incentives a few years ago, said, and I'm paraphrasing here, so don't quote me on this, but something along the lines of... They are very generous, however they will not be easy to earn, and if they do earn them, we, as shareholders, will have done very well indeed out of holding Macmahon shares from here.

Well, fast forward a few years, and SJ was correct, in that they were NOT easy to earn, and they did NOT earn them (and they were NOT paid those incentive payments), and as a result we, as shareholders, have NOT done particularly well out of holding Macmahon shares over the past few years.

Plenty of potential, but so little delivered to shareholders recently...

Maybe one for FY24?!

Disclosure: I continue to hold MAH shares, both here and IRL (in real life). They are one of my two favourite mining services companies that do the actual contract mining for mine owners. The other one is NRW Holdings (NWH). NWH have performed better, and appear to have better management, and they are also more diversified than MAH are (in terms of revenue generation from different business units), however I still have high hopes for MAH.

Further Reading: Canaccord-Mining-Services-Series-Presentation-June-2023.PDF [15 June 2023]

Macmahon Holdings Limited | Mining & Construction Australia [company website]