- Fleet size increases by 16 per cent year on year to 109
- Utilisation rates and revenues per rig also grow
Mining equipment provider Capital (CAPD) said revenue for 2021 came in at $226.8m (£189.7m), 68 per cent higher than the prior year and slightly ahead of recently-revised guidance.
The company posted its strongest quarter of growth in the final three months of the year, with revenue up 8 per cent on the third quarter and 92 per cent on the same period a year earlier.
Throughout 2021, the company grew its fleet by 16 per cent to 109 and increased utilisation levels substantially – 78 per cent of rigs were used, compared with 57 per cent a year earlier. Average monthly revenues per operated rig also grew by 6 per cent to $181,000.
The Mauritius-based company has also been increasing stakes in mining and exploration companies, an activity it aligns with securing service contracts. These investments recorded (largely unrealised) gains of $29.1m, doubling in value compared with the second half of the prior year.
Investment in mining activity boomed last year when compared with a pandemic-disrupted 2020. Exploration budgets increased by 35 per cent globally to $11.2bn in 2021, according to a report published in November by S&P Global Market Intelligence. It predicted that the growth will moderate this year, but exploration budgets will still be 5 to 15 per cent higher than last year.
Capital’s share price rose 4 per cent, bringing its 12-month gain to 47 per cent. Broker Peel Hunt said that despite its re-rating, it is still only valued at “the lower part” of its historic trading band, suggesting it has much further to go.
The broker forecasts earnings of 13.1¢ per share for the year ahead. Capital’s shares are currently valued at nine times this level, which is below both its peers and the industry average. Given that the industry shows few signs of a slowdown, we maintain our buy recommendation.
