Global manufacturing is undergoing a seismic shift, replacing cheap off-shore labour with fully automated factories, perhaps even eventually powered by agentic AI. One company at the heart of this transformation is Mpac Group (MPAC)
Indeed, having acquired CSi Palletising (€56m), Boston Conveyor & Automation ($17m) and SIGA Vision in H2'24, Mpac Group is now a 'One Stop Shop' for all things high-speed packaging and production automation - not only offering a comprehensive range of advanced end-to-end solutions, supported by best-in-class service, but also garnering significant economies of scale, attracting more top talent and being far less dependent on any single order/client.
Better still, the group continues to invest in new cutting-edge products and 'smart' technology. Given all this, I see no reason why MPAC can't achieve its strategic goals of 10%+ pa organic growth alongside 10%+ EBIT margins.
Ok, but how in the business faring?
Well, today the Board released another positive FY'24 trading update, saying that "underlying PBT would be in line with market expectations" (est £10.5m vs £7.1m LY), aided by higher H2 project margins and operational efficiencies, whilst equally generating an impressive step-up in H2 adjusted PBT to an est £6.5m vs £4.0m H1.
What's more, all 3 acquisitions are performing well and being successfully integrated, with the enlarged sales pipeline remaining strong. In fact, when combined with a closing order book of £111.0m (£72.5m LY) and >£30m+ pa of repeat service revenues, this provides robust visibility over Shore Capital's FY25 forecasts of adjusted PBT and EPS of £17.8m and 44.2p respectively on turnover up 77% to £218m (est £122.5m LY).
Elsewhere, net debt closed Dec'24 at £37.0m, including £8m of invoices that were mostly paid in early January. Consequently, the group remains on track to bring net debt down to less than 1x EBITDA by Dec'25.
CEO Adam Holland commenting: "We start 2025 with an increased and diverse order book from our resilient end markets, supporting delivery of our FY'25 expectations." Several new innovative products were also launched in 2024, such as the 'Ostro' (mid range) and 'Horizon' (top load) cartoners, alongside making good progress in developing next-generation digital services.
Panmure Liberum has a target price of 800p/share.
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