There's an awful lot to like about Macmahon Holdings. Macmahon Holdings is a mining services contractor, established in 1963 and listed on the ASX twenty years later. Prior to its listing, Macmahon projects were principally in the Northern Territory and Western Australia but a series of acquisitions and expansions now sees them operating in such diverse geographical regions as Africa, Mongolia, Chile and Malaysia. In 1997 Macmahon was the first Australian contracting company to have its entire operations accredited to international Environmental and Quality Assurance standards and in the last couple of years they have been awarded a US $2.8 billion mining services contract. They were also selected as the exclusive partner to provide contract mining services at the Byerwen Coal Mine in Queensland’s Bowen Basin. Macmahon is widely considered the contractor of choice for resources projects across a range of locations and commodity sectors. Their mining and engineering capabilities provide both surface and underground operations - including mine development, materials delivery and plant and equipment maintenance - and they manage mines for some of the world's largest mining companies. Macmahon has a well-established presence and reputation in their industry and a very experienced board and executive team. These, together with their financial health and future outlook, are what drew us as investors. In 2015 and 2016 they were faced with a few challenges which saw their share price bottom at 0.05 before a slow, and mostly steady, climb to the 0.22 it is at the time of writing. During the 2018 financial year they generated revenue of over $700 million, almost double from FY2017. They have forecast over $950 million for FY2019. EBIT was over $41 million (FY2017) and they project $70-$80 million for FY2019. Their current tender pipeline is valued at around $7 billion - on top of their $5.4 billion order book - and their modelling suggests that they have the potential to organically grow revenue to over $1.5 billion per year over the next 3 years. Their balance sheet is healthy and their debt levels are low so they are positioned well to deliver maximum shareholder value in the ensuing period.
