Perenti Ltd.

Overview Key strengths Key risks The second largest Australian underground and surface mining services operator with a modestly diversified service offering. Small scale compared with global mining companies, which exposes it to the risk of loss of business as companies "in-house" during commodity downcycles. Track record of prudent financial management relative to industry peers.Sizable contract book with counterparty diversity. Material exposure to African countries that have high sovereign and operational risks relative to Australia.Capital-intensive business with volatile cash flows due to the company's indirect exposure to volatile commodity prices. That said, the company has continued to shift more of its client base to lower-risk jurisdictions such as Australia, North America, and Botswana, from higher-risk West Africa. Exposure to West Africa

...Perenti Ltd.'s (Perenti) relatively small scale globally, material exposure to West Africa, and indirect exposure to volatile commodity prices from contract mining revenues constrain creditworthiness, in our view. That said, the company has continued to shift more of its client base to lower-risk jurisdictions such as Australia, North America, and Botswana, from higher-risk West Africa. Exposure to West Africa has decreased to 37% of fiscal 2022 revenue, from 48% of fiscal 2020 revenue. However, as the company re-weights its portfolio to a lower sovereign risk profile, we expect lower project margins from safer jurisdictions thereby compressing Perenti's...

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