Iluka, Worley added to Goldman Sachs APAC Conviction List
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The news: Mineral sands miner Iluka Resources and engineering group Worley both notched gains on the ASX as Goldman Sachs added the two stocks to its 'APAC Conviction List', a roster of stocks the firm believes will outperform.
The numbers: Iluka shares were up 1.4% to $5.26 by 1pm AEDT, while Worley shares edged up 0.3% to $13.87. Both companies' shares have fallen by around 20% over the last 12 months.
Goldman Sachs has a price target of $7.70 on Iluka and a $18 price target on Worley.
The context: Goldman Sachs mining analyst Paul Young believes that zircon, a mineral used in ceramics and chemicals, is one of the "best structural supply side stories in commodities", with Iluka's world-leading market share of 30% making it a major beneficiary.
Young expects the company's EBITDA to double by 2028, bolstered by the construction of a new rare earths refinery, the western world's fifth such refinery outside of China.
Meanwhile, Goldman Sachs believes Worley is well positioned to play a role in enabling the ongoing transition from fossil fuels to a more sustainable energy mix, and to benefit from traditional spend in periods of heightened focus on energy security of regionalisation of supply chains.
The stock has lagged due to reduced customer investment momentum, Goldman Sachs analyst Niraj Shah said, but is expected to meet guidance of low double-digit earnings growth in FY25.
Iluka and Worley are the only Australian companies on the conviction list.
The other companies added to the list include Japan's Mizuho, Mitsui Foundation, Ryohin Keikaku, and Kotobuki Spirits, as well as Chinese e-commerce group JD.com.
SMFG, Sungrow, Suntory Beverage & Food, and Tencent — which was blacklisted by the US government on Tuesday for alleged links to the Chinese military — were removed from the list.
The source: Goldman Sachs research
