Recovery across the board in the first half

Marshall of Cambridge’s results for H1 were very impressive, with all businesses delivering an uplift in revenue and margins. The most spectacular was Motor Retail, performing at record levels, with guidance improving three times during the period. The demand/supply imbalance within the used vehicle market has resulted in selling prices increasing by more than 15% y-o-y across the market, in turn, positively influencing gross margins.

Within the Aerospace and Defence division revenues increased modestly y-o-y, with the MRO and modification work on the RAF’s fleet of C-130s showing a positive trend, and the completion of the first Hercules KC-130 for the US Marine Corps (USMC) in July, signifying an encouraging start to the potentially substantial contract.

The completion of residential unit sales within the Marleigh development (phase 1a) added profitability and the disposal of The Land North of Cherry Hinton (LNCH) has resulted in significant cash flows into the Property division (MGP). Phase 1b of Marleigh is now being marketed, with detailed planning permission submitted for phase 2.

H1 2021 proved a busy period for the Group. Not only did revenues and operating profit improve on last year’s pandemic associated difficulties, but a new CEO was appointed, with a new NED joining the Board at the beginning of October, completing the overhaul of the senior management team.

The share price is currently valuing the entire Group at modestly above its stake in MMH, and markedly below NAV. On this basis it would suggest that the three other divisions have only a modestly positive valuation, yet they remain profitable. Our sum-of-parts valuation suggests a fair value of 611p per share, comfortably more than double the most recently matched NVPO price.

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