Successful turnarounds are the stuff of investor dreams. Back in Sept'16 MPAC's shares were languishing at 49p, after a sustained period of under-performance. However on 6th Jun'16 CEO Tony Steels was appointed. Since then he has engineered a >3-fold rise in the stockprice - centred on business simplification, the disposal of the Tobacco equipment division, a one-team culture, new product launches and importantly a rapidly expanding top line.
In May, the latest piece of the growth jigsaw was put in place. This time by acquiring Lambert Automation for £15m “ and adding automated production technology to MPAC's expertise in high-speed packaging machinery. Hence, now being able to offer clients fully integrated, end-to-end solutions from design & build, right through to installation & aftermarket support.
The good news is the strategy is going down a treat with customers. The firm saying today that FY19 results would be significantly above expectations. Consequently, we have upgraded our FY19 & FY20 turnover forecasts to £85.0m (+25% organic growth in packaging) & £95.5m respectively “which has likewise pushed adjusted EBIT higher to £5.5m (+20%, vs £4.6m before, £1.4m LY) & £6.5m (+2%, vs £6.4m) for this year and next.
Plus, due to the strong H1 and encouraging outlook, we have raised our valuation from 245p to 260p/share - underpinned by excellent visibility for H2'19, based on YTD revenues, orderbook flow-through and normal repeat service business.
Tony Steels adding: Trading is ahead of the Board's and market expectations, with the momentum gained in the latter months of 2018 continuing into H1'19. The current order book, year to date order intake and the volume of quotation activity provides confidence in the prospects for the remainder of FY19. The Board anticipates that profit for FY19 will be significantly above market expectations.
