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.
