Mitchell Services' underlying 1H financials and underlying FY21 earnings (EBITDA) guidance were very close to Morgans expectations. However, it's considered it will likely take time to repair investor confidence from the -$7.3m SMS Mining Services impairment.

While management has confidence in a positive outcome in the dispute, the broker doesn't forecast a full recovery of outstanding receivables via court proceedings commencing March 10.

The Speculative Buy rating is maintained. The target price is decreased to $0.725 from $0.906. While noting the impairment does delay de-gearing, Morgans forecasts an acceleartion towards a net cash position by 2H 2022, with likely capital management. 

Sector: Capital Goods.

Target price is $0.73.Current Price is $0.42. Difference: $0.31 - (brackets indicate current price is over target). If MSV meets the Morgans target it will return approximately 42% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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