Marcventures gets buy rating

MANILA, Philippines - In a research report dated Feb. 3 2012, First Metro Investment Corp. (FMIC), the country’s largest investment house, gave nickel miner Marcventures Holdings Inc. (MARC), a listed holding company with mining operations in Surigao Del Sur, a buy rating.

Marc, as of the date of the report was trading at P2.68 per share. FMIC analysis gives Marc an intrinsic value of P4 per share.

According to the report, Marc is seen doubling its shipment to 18 or one-million wet metric tons (WMT) in 2012 on a combination of low-grade and high-grade nickel ore. “Based on this, it is possible the company could make net profits of three times the 2011 expected profits of P300 million, at best.”

FMIC estimates net profits of Marc to hit P774 million (conservatively) which gives its current price of P2.68 a PE of 6.0X, below market average of 17X. FMIC sees the 2012 income drivers to include higher revenues due to the revival of LME nickel prices and higher tonnage with operations becoming more streamlined after fine tuning of its start up operations with Marc’s first shipment in August 2011.

Marc has a three million WMT, three-year contract with Dunfeng International (Philippines), the wholly owned subsidiary of Dunfeng International (HK), China’s largest nickel ore importer in 2011. This forward contract assures Marc of a market for its production over the next three years.

The upside is also quite evident because Marc has only explored 120 hectares or 2.5 percent of its total 4,799 hectares MPSA area. Other analysts have commented that with the profits coming from its 2012 operations, Marc will be well positioned to launch an aggressive exploration program on the balance of its MPSA area, over 4,600 hectares and increase significantly its ore reserves. This is expected to generate much higher valuation for the company.