No-Moat Monadelphous Shares Still Too Stretched
While at AUD 17.75 no-moat Monadelphous shares are nearly 10% below November AUD 19.50 highs, they remain above our unchanged AUD 9.00 fair value estimate. Our fiscal 2018 and fiscal 2019 EPS forecasts of AUD 0.71 and AUD 0.74, respectively, are also little changed, fiscal 2018 representing a 14% increase on fiscal 2017 AUD 0.62 lows. Our fair value estimate equates to a fiscal 2022 EV/EBITDA multiple of 7.5. At AUD 17.75, the market values Monadelphous on a multiple of 15, too generous we think...Monadelphous Group provides construction, maintenance and industrial services to the resources, energy and infrastructure sectors. Co. has two operating divisions working predominately in Australia, with overseas operations in New Zealand, China, Papua New Guinea, Mongolia and the U.S. The Engineering Construction division provides large-scale multidisciplinary project management and construction services. The Maintenance and Industrial Services division focuses on the planning, management and execution of mechanical and electrical maintenance services, front-end scoping, shutdowns, fixed plant maintenance services, access solutions, mine dewatering services and sustaining capital works.
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