Results from Capital Limited (LSE:CAPD) topped Berenberg’s forecasts, thanks to lower costs and tax.
The broker said the mining services company issued a strong set of results for 2021 while guidance for the current year was ahead of expectations.
Management has forecast that revenues this year would be in the range of US$270mln – US$280mln, which means even the bottom of the range figure is higher than Berenberg’s forecast of US$261mln.
The broker was also a little cautious on its predicted rise in the growth of the drilling rig fleet, which is set to increase by 11 this year, compared to Berenberg’s forecast of an increase by five; with the increase in rigs comes a bigger than expected guidance range for capital expenditure.
“Management commentary continues to suggest a buoyant market environment, with continued strength in demand driving the company’s fleet expansion, and robust tendering activity across all business units. The company notes that, following the rise in commodity prices, it is observing an increase in projects moving forward to development and therefore expects the pipeline of new mining contracts to expand in the coming years. Management continues to enjoy strong demand in the laboratory services business,” Berenberg noted.
The broker increased its target price to 138p a share from 134p previously.
Capital’s shares currently trade at 92p.