The Mineral Resources Limited (ASX: MIN) share price is pushing higher on Thursday.
In afternoon trade, the mining and mining services company's shares are up 0.6% to $77.38.
This means the Mineral Resources share price is now up 32% since the start of the year.
Can the Mineral Resources share price keep rising?
The good news for investors is that the team at Bell Potter doesn't believe it is too late to buy the company's shares.
According to a note from this morning, the broker has retained its buy rating and lifted its price target by 25% to $100.00.
This implies potential upside of 29% for investors over the next 12 months.
What did the broker say?
Bell Potter was pleased with company's quarterly update this week. However, its bullish view on the Mineral Resources share price is more to do with the future and particularly its lithium operations.
The broker believes that the company's shares are undervalued in comparison to Pilbara Minerals Ltd (ASX: PLS) and that a lithium demerger will unlock value. It explained:
Pilbara Minerals Limited's (PLS) upstream lithium business is similar to MIN's, on an attributable SC production basis. The two companies SC production plans are approximately equivalent. However, MIN's mineral inventories are half those of PLS's. MIN has traded mineral inventory for a more developed downstream conversion business, which is beginning to enhance earnings.
PLS and MIN have comparable enterprise values, notwithstanding that MIN has significant other businesses (services, iron ore and energy). In our opinion, MIN should trade at a significant enterprise value premium to PLS, highlighting the case for a demerger of MIN's lithium business.
Though, Bell Potter still expects the Mineral Resources share price to outperform even if a demerger doesn't happen due to its development projects. It explained:
In addition to current earnings growth from resurgent lithium prices, MIN is in a business and project development phase, with the inherent uncertainties. The $3 billion Onslow Iron Project is in construction. Spodumene concentrate production is expanding at Wodgina and Mount Marion. JV agreements with Albemarle Corporation aren't finalised. LH conversion plant locations and costs are unknown.
Over the next two-years, as business development concludes, MIN's value should be re-rated. However, if MIN decides not to wait, a lithium demerger is an option to maximise value earlier. Either way, shareholders have two-ways-to-win.
