FY22 first half trading update: supply chain pressure
In a trading update for the half year to 30 June 2022, Mpac reports that supply chain difficulties affecting the availability of critical components has impacted on delivery lead times to customers. Mpac reiterates a strong prospective pipeline and order book, and has implemented a series of mitigating measures. Nevertheless, combined with inflationary pressure on costs, the impact on profitability leads us to reduce our outlook for FY22:FY22E: revenue of £96m, +1.8%YoY, previously £105.0m.
FY22E EBITDA (adj.) of £6.1m, reduced from an estimated £11.6m.
Taking into account the impact of supply chain issues on near-term profitability, but cognisant of the strength and direction of underlying demand, discipline in cash management – including the potential fruits of collaboration with Freyr Battery – we adjust our fair value for Mpac shares from 660p to 485p, indicative of a FY24 EV/EBITDA multiple of 6.7x.
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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