Back on track
MPAC is a specialist provider of high speed packaging machines (76% of sales) and complementary services (24%, eg spares/maintenance) with c. 350 staff.MPAC’s recent ‘bump’ occurred after experiencing a temporary lull in demand with H1 bookings being 20% below LY, primarily because of macro uncertainties and delayed customer decision making. The good news is that since the July profit warning, orderflow has started to recover, albeit pipeline conversion is still not fully back to normal.
More positively, the previously announced £1m of cost-overruns relating to two legacy contracts (one in Canada and the other UK) have been thoroughly investigated with remediation plans now in place. Here, the UK first-of-a-kind machinery project is being commissioned with final delivery set for H2’19. While the Canadian job should be concluded by December.
Management reckon today’s backlog is of much “higher quality and lower complexity†than before. In turn, underpinning this morning’s ‘in line’ 1st half results and confident outlook. Where H1’18 adjusted EBIT came in at £0.0m (£0.3m LY), impacted by the above one-off contract issues – on turnover up 11% to £28.2m (£25.4m) thanks to the strong opening orderbook.
Plus, there is no shortage of financial muscle to execute strategic initiatives, with net cash of £24.9m, equivale Importantly from a risk perspective, we estimate that as there is >90% cover to reach our 2018 sales and EBIT forecasts of £57.0m and £1.5m respectively. Aided by the extra cost cutting measures (eg headcount reductions) that were implemented after the period end. nt to 123p/share. Which together with the 253p/share of tangible net assets, should also in our view, provide a solid floor under the 120p stockprice.
Accordingly, we make no change to either our forecasts or 170p/share valuation.
Avingtrans is principally engaged in the provision of engineered components, systems and services to the energy, medical and traffic management industries. Co. is organized into two main segments: Energy and Medical. The Energy segment is engaged in the design and manufacture of machined and fabricated pressure and vacuum vessels and process plant and equipment for the power, oil and gas. This segment is also engaged in the design and manufacture of fabricated poles and cabinets for roadside safety cameras and rail track signalling. The Medical segment is engaged in the design and manufacture of machined and fabricated pressure and vacuum vessels for the medical markets.
Mpac Group is focused on its Packaging Machinery business, Mpac Langen, which designs, precision engineers and manufactures packaging solutions, machinery and high specification automation, secondary packaging equipment and end-of-line robotics and at-line instrumentation and testing solutions as well as providing solutions including the design and integration of packaging systems.
Sealed Air is a global provider of packaging solutions for the food, e-Commerce, electronics and industrial markets. The company serves an array of end markets including food and beverage processing, food service, retail, commercial and consumer applications, by providing food safety and security, product protection and equipment. The company's segments include: Food Care, which serves perishable food processors, predominantly in chilled, smoked and processed meat, poultry and dairy-solid markets worldwide, and maintains positions in target applications; and Product Care, in which its solutions are designed to protect goods in shipping.
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