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Mpac Group reports strong start to 2024, on track to meet full-year expectations

13:28, 15th May 2024
Paul Hill
PMH Capital

Industry 4.0 is one of the hottest themes in manufacturing, not only allowing brand owners to reduce unit costs and downtime, but also materially lift productivity and ROIs.

However, achieving these benefits is not simple. Indeed, it typically involves using engineering experts like Mpac Group (MPACFollow | MPAC, a specialist provider of full line, high-speed packaging and automation solutions to design, build, install, optimise and/or service equipment in both existing and new factories.

Today, the company said that after a strong close to 2023, momentum had continued into 2024, with YTD sales and adjusted PBT both above prior period levels.

Sure some smaller firms are struggling a little to finance new machinery due to the higher interest rates. Yet equally, MPAC has robust revenue cover for the rest of the year and serves a host of blue chip customers, including Nestlé, GSK, CooperVision, Kellogg’s, Diageo, Dexcom, Mars, and J&J. 

This means results are on track to hit full-year expectations (H2-weighted as usual) with Shore Capital forecasting adjusted PBT of £10.5m (vs £7.1m LY) and 38.7p EPS (25.9p) on turnover up 5% to £120m. There will be a small cash outflow too in H1, followed by an opposite inflow in H2 as working capital unwinds.

This is just the start though.

Further out, the Board is targeting 10% EBIT margins and LFL top-line growth of 10% across the cycle - which will be achieved via a combination of market share gains (TAM $65bn-$70bn), operational excellence, a broadening of customer base, and innovation.

Elsewhere in clean energy, the group secured a £1.2m contract in April to help build a pilot plant for Ilika's planned solid state battery project Goliath, whilst investors could also hear soon about progress wrt FREYR Battery's cell automation plans.

Finally in terms of valuation, Shore Capital has a fair value of between 500p to 600p/share.


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