Accelerated momentum
In its Trading Update for the six months ended 30 June 2021 Mpac reports that the upturn seen in H2 2020 has accelerated with H1’21 order intake well above that a year earlier - which had suffered the impact of COVID-19. The update highlights:• Strong performance in the Americas, enhanced by the successful integration of Switchback Group, which continues to trade ahead of management expectations, and an expanded regional presence.
• A second half order book which is ahead of the opening level of £55.5m. This underpins our full year revenue outlook of £95.0m.
• Implementation of unified business processes providing the basis for streamlined operations and a platform for sustained growth.
This places Mpac on a prospective FY21 EV/EBITDA of 8.3x and PE of 14.8x delivering a ROE of 14.2%. The medium-term outlook to FY23 indicates revenue CAGR at a healthy 8.6% and EBITDA CAGR of 14.4% placing Mpac on an attractive +3 year forward EV/EBITDA of 6.9x.
All of this leads us to conclude a fair value for Mpac shares of 600p.
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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