Monadelphous Group – Revenue growth to flatten from Fiscal 2014
The Monadelphous Group (MND) is one of Australia’s most successful project management, construction, asset management and maintenance service companies focused on the Resource, Energy and Infrastructure sectors. Revenue, over the five years to June 2013, is forecast to jump from under $1.0 billion to $2.6 billion.
Mona’s interim report, released on Tuesday 19 February, revealed a more sober outlook from Fiscal 2014.
To summarise:
* after two consecutive years of extraordinary growth of more than 30 percent (to June 2013), 2013/2014 is currently anticipated to be a period of consolidation in which the achievement of any revenue growth will be challenging;
* uncertainty remains in respect of the rate of new project approvals in the resources and energy sector as customers reassess their capital expenditure plans and focus their attention on high return options;
* customers are tightening discretionary expenditure and reducing overall costs; and
* whilst the opportunities for construction beyond this financial year (to June 2013) remain solid based on volume of approved projects, project delays and a slowdown in near-term new major project approvals are likely to reduce the pipeline of opportunities in the medium-term.
At the time of writing the Monadelphous share price declined by 6% from $27.85 to $26.15.
Chief Executive Officer of Montgomery Investment Management, David Buckland has over 30 years of industry experience. David is a deeply knowledgeable and highly experienced financial services executive. Prior to joining Montgomery in 2012, David was CEO and Executive Director of Hunter Hall for 11 years, as well as a Director at JP Morgan in Sydney and London for eight years.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Jim Hasn
:
Hi David
I’m a value investing fan. I’m puzzled by your article including the share price comment at the end. The next day it was down 10% further and got to $22.50 before bouncing. Surely this was too good an opportunity to miss and since then it has found it’s way back to $25. MND has always under-promised and over-delivered. At the end of the reporting season, this report will still be in the outstanding group.
Cheers Jim
Geoff Scott
:
as a holder of a small parcel i was pleased to sight this brief as i considered the stock may have run too hard despite what appears to be an ex. board & management team.
Gurkamal Kanwar
:
Hi David thanks for the insight. If I wanted to hold MND over the long term (5+ years) how should value the business knowing that there will be a slowdown?
Should I do sensitivity analysis and pick the high probability scenario reflecting a margin of safety?
Although MND may not have gangbuster growth over the medium term but it should still continue to make satisfactory growth in revenue and profit hencing making it an attractive investment at the right price.
Any insight would be appreciated.
Thanks
Kamal