That $6bn TenderBook..., page-200

The only three companies in the mining and construction services sector that I would consider happens to be the three that you mentioned. There may be others, but I cannot call them to mind.

That a company is well run and has good management is rare, and MND, LYL and NWH fit into this august category. All the companies that I have invested in that transpired to be lemons had one single factor for their poor performance, and that is poor management, and in some cases dishonest management. Somebody, perhaps Madamswer, used the words, “cadigan-wearing Italians” to describe the management team of LYL and MND. By that I assumed that the managers were hard-working, practical and good engineers/managers – more interested in long-term results than immediate appearance.

When short-listing companies in this sector, I excluded LYL in favour of MND for reasons that I have long forgotten (probably size). Consequently, because I have never invested in LYL, I have not kept myself informed about it, so I'll say no more about it.

MND is, in my mind, the better company than LYL and NWH in terms of its ROI and similar metrics, which is reflected in its ability to pay good dividends, and its rare resort to capital raising. It is reasonably fairly valued, so I do not expect to make capital gains in the short-to-medium term. I sold some MND in recent weeks, because I had to find $10,300 in a hurry, but normally I would sit on my holding. As an aside, LYL and MND have a joint venture, of which you probably are well aware.

NWH is also well run. Historically I classed it as a “grunt” (good at earthmoving, and not too flash on things more complex than that). However, NWH is transitioning into something more than a grunt, and it should emerge closer to MND in sophistication in the short term. The near-death experience at the hands of Samsung can be excused as not being NWH's fault, but the experience would have taught management a valuable lesson on choosing with whom they should work, and in what legal jurisdiction they would have to resort if things go to litigation. If you look at my posts in the NRW forum you should find more detail on the gist of this paragraph.

If I were in your shoes, I would take a position in NWH, because it has more potential for meaningful capital appreciation than MND. Ignoring the “noise” created by bots, shorters, trend-followers, I think NWH has its investment risk significantly biased to the upside over the next three years. I personally hope to see the SP rise to $2.30 this tax year. Landing a few good contracts should shift the SP up, and in the longer run viable margins should move EPS and DPS per share to a new steady-state-trajectory that will allow more traditional share valuation methodologies to support the then per-share valuation than now is the case.

I hold 131,302 NWH and 14,340 MND, and have held them for years. Until NWH catches up to the depth of sophistication, I expect NWH would have a PER of about 10, and MND should be at least 15 – both are very rough approximations.