'Slightly ahead of expectations'
Molins is a technology-led service provider, with the tobacco industry accounting for approx 60% of sales. In line with the turnaround strategy, Molins said this morning that it had sold its US based analytical services laboratory, Arista, for £0.3m (on a cash/debt free basis). The disposal provides a clean exit from this loss making unit, along with putting a line under the profit/cash drag that it had on the wider group. Indeed, last year Arista reported EBITA of -£2.0m on revenues of £2.5m. Updating on current trading: the rest of the Scientific Services division is 'more challenging than expected', with Tobacco Machinery also experiencing 'difficult' conditions, but Packaging Machinery is 'ahead of last year'. As a result, we have nudged up both our adjusted PBTA from £3.3m to £3.7m and price target from 125p to 138p/share. At 88p the stock looks cheap: trading on an EV/EBITA of 5x compared to a sector average of 12.1x, along with paying a 6.3% dividend yield (>2x covered).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.
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