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MND - MONADELPHOUS GROUP LIMITED


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  • 4 weeks later...
AGM comments: Monadelphous (MND) held its AGM today and made a few outlook comments. The key points include:
1H11 guidance: Monadelphous noted that it expects 1H11 revenues to at least match those of the previous corresponding period, with margins steady.

Positive outlook: Monadelphous also stated that prospects in the short to medium term remain positive, with tendering activity across all markets at high levels.

Market conditions strengthening: The company further noted that market conditions have continued to strengthen over recent months and that the high level of planned investment in iron ore, coal and LNG developments is likely to drive a rapid return to full capacity.

Growth to continue: "Monadelphous is well positioned to capitalise on these opportunities and continue on its long term path of growth".

No FY11 guidance: This is the first time that Monadelphous has provided guidance in relation to the FY11 period. We note that the company did not provide specific FY11 guidance but noted that it expects 1H11 to be essentially in line with 1H10.

Annualised 1H11 guidance implies flat FY11: Admittedly, the 1H11 guidance that Monadelphous provided today, if annualised, suggests that FY11 is also likely to be relatively flat on pcp.

GS&PA forecasts growth: We are forecasting growth in NPAT in FY11 of 6.4% (Bloomberg consensus: +5.3%). We are therefore anticipating a moderation in growth when compared to the 12.1% growth in NPAT that Monadelphous delivered in FY10.

Positive contract win-rate: One key reason why we remain comfortable with our forecast for growth in FY11 is Monadelphous's positive contract win-rate so far this year.

Earnings and Valuation Impact:
No change in forecasts: There is no change in our earnings forecasts.

$18.41 DCF: With no change in our forecasts there is similarly no change to our $18.41 DCF valuation.

Investment View:
$19.00 target price (TP): We choose to set our TP for Monadelphous using a relative PER approach and we are increasing the TP by 1.6% to $19.00 due to the recent increase in the market multiple.

Maintain HOLD: There is no change to our HOLD recommendation. In our view, the stock appears to represent fair value at the moment, trading at a FY11E PER of 16.7x which is a 26% PER premium to the small industrials PER of 13.2x.

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  • 11 months later...

2011 AGM just held

OUTLOOK

- Unprecedented pipeline of opportunities across resources and energy markets

- Well positioned for growth in all markets

- Further development of infrastructure sectors ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ pipelines, water, power

- $870 million in new contracts secured in FY12 to date

- Strong demand and contract flow expected to deliver at least 15% revenue growth for FY12 H1 with healthy margins maintained. At this stage, similar revenue growth expected for the full year

- Continued focus on attraction, development and retention as competition for skilled labour accelerates

anticipate dividends to be lifted as the sweet spot turns into a sweet decade

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  • 2 months later...
At its Annual General Meeting in November 2011, Monadelphous stated revenue growth for the first half of the 2012 financial year would be at least 15 per cent greater than the previous corresponding period and healthy margins would be maintained.

 

Based on current management accounts, sales revenue is expected to be around $870 million, an increase of approximately 24 per cent on the previous corresponding period. Net profit after tax is expected to be between $55 million and $58 million, representing an increase of between 21 per cent and 27 per cent.

 

The strong revenue momentum is expected to continue, with approximately $1.4 billion of new contracts announced in the first half of the 2012 financial year. At this stage second half sales revenue is expected to be similar to the first half.

 

"Continued strong demand from customers across all our markets and higher than expected levels of contract activity has resulted in this strong growth," Managing Director Rob Velletri said.

 

Monadelphous will report its results for the half year on Tuesday 21 February

 

I can live with this

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  • 4 weeks later...
Leading engineering group Monadelphous Group Limited (ASX:MND) today announced it has entered into two milestone framework agreements with Rio Tinto's iron ore operations.

 

The agreements give Monadelphous preferred contractor status for a program of structural, mechanical and piping (SMP) work and a program of electrical and instrumentation (E&I) work over the next five years.

 

Work under the agreements will be part of the major expansion of Rio Tinto's iron ore operations in the Pilbara region of Western Australia, to a capacity of up to 353 million tonnes per annum by 2015. The agreements provide a process to arrive at multiple project-specific construction contracts for Rio Tinto's expansion program. They include the provision of SMP works associated with the coastal

stream and SMP and E&I works associated with the eastern stream of the program.

 

The agreements are non-exclusive and a number of agreements of this type are expected to be made with other suppliers, covering different work streams and sites.

 

A key feature of the innovative agreements is early contractor involvement (ECI) which will enable Monadelphous to work with Rio Tinto in the early phases of projects to contribute to design constructability and early cost and schedule development to optimise delivery.

 

The agreements will give visibility of a stream of projects and continuity of work. Visibility will allow longer term resource planning and optimisation while continuity of work will assist employee retention and attraction and ongoing Indigenous engagement initiatives, as well improved safety, cost and schedule outcomes.

i can live with this

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  • 1 month later...
Contract wins to fuel FY13 earnings growth

 

Since February, MND has secured domestic engineering construction and maintenance contracts with a combined value of more than $220m with major companies operating in the oil, gas, iron ore and coal sectors.

 

In the first three quarters of the 2012 financial year, MND has secured $1.8bn of contract work, more than double the contract wins achieved in FY10 and FY11

.
bottom drawer till 2014
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  • 7 months later...

Monadelphous held its AGM on Tuesday and provided initial revenue guidance for both 1HFY13 and FY13. Key points were:

 

- 1HFY13 revenue growth of c.40%: Monadelphous said it expects revenue growth of c.40% in 1HFY13 relative to the pcp.

 

- FY13 revenue growth of c.25%: The company also said that, at this stage, it expects revenue growth of c.25% in FY13.

 

- Margins under pressure: Monadelphous did not provide any margin or earnings guidance, but said that "margins are coming under pressure in this more competitive environment."

 

- High working capital demands: The company said there has been a rapid increase in demand as construction work ramps up and this is creating "abnormal working capital demands."

 

Implications

We upgrade our EPS forecasts in FY13/FY14 by 5%/3%, while we modestly downgrade our FY15 EPS forecast by 1%. The key driver of the upgrades in FY13/FY14 is increased revenue forecasts, partially offset by lower margin forecasts.

 

Valuation

We increase our 12-month price target by 7% to A$24.00. We determine the price target through a relative P/E approach and apply a 10% premium (unchanged) relative to the S&P/ASX 200 Industrials ex financials. The increase in our FY13 EPS forecast is the key driver of the increase in our price target.

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  • 6 months later...
  • 1 month later...

Monadelphous Group Limited (MND) - $14.89 ACCUMULATE

 

Project Delays and Cancellations Will Result in Lower Longer-Term Earnings Growth for Monadelphous

 

We review our earnings forecasts, specifically re-evaluating the growth prospects of Monadelphous' engineering, maintenance and industrial services businesses due to the weaker economic conditions and continuing mining activity slowdown.

 

Project delays, contract deferments, stringent cost containment, stronger customer bargaining power and increased competition are combining to negatively impact companies providing services to the domestic mining and energy sector.

 

During the past three months, many contractors including WorleyParsons, UGL, and Transfield Services have downgraded forecast earnings and outlined a gloomy outlook for the mining services industry.

 

We have lowered our longer term NPAT forecasts by 5% to incorporate project cancellations and a steadily declining tender pipeline. Our fair value estimate is lowered to AUD 18.00 from AUD 19.00.

 

We believe the share price is undervalued but note the markets concerns regarding the possibility of a further deterioration in economic conditions and weaker resource project construction activity. We caution it is very difficult to forecast earnings for contractors with exposure to project activity in the resource sector. It is for these reasons we retain our high uncertainty rating.

 

from Lonsec Research

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