Despite today’s geopolitical angst, US tariffs and ongoing wars, factory automation remains one of the world’s most powerful growth drivers. Manufacturers desperately need to lift productivity, improve reliability/quality and reduce cost. All secular trends for Mpac Group , a specialist provider of high-speed packaging and factory automation serving the Food & Beverage and Healthcare sectors. 

Here H1’26 turnover was broadly flat at £71.0m, but order intake jumped 43% to £77.8m - with the backlog rising 5.6% to £80.5m in June and £82.5m in August. Thus enabling the Board to maintain FY’26 guidance, underpinned by robust H2 revenue coverage. 

Sure, profitability has been temporarily hit (gross margins fell 6.6% to 30.1%) due to softer equipment demand, competitive pricing, delayed customer decisions and lower factory utilisation. Yet equally, these pressures were partly offset by cost reductions (closure of Cleveland site), improving H2 loading and a resilient Services operation. Where turnover rose 7.1%, accounting for 23% of the group and providing valuable repeat sales from its large installed machine base

What’s more, H1 OE order intake jumped 64% to £60.7m, suggesting demand is tentatively recovering and customers have only postponed rather than cancelled capex projects. Elsewhere, management is shifting engineering and assembly towards lower-cost Romania and Malaysia, rolling out standardised products and expanding digital subscriptions — all of which should enhance margins when demand eventually returns to pre tariff levels. 

Importantly too, was the disposal of loss-making Lambert for up to £20m (£16m upfront). Here Lambert consumed £3.2m of operating cash in H1 and delivered a £1.3m loss. So the exit has not only simplified the group and eliminated P&L losses, but also materially strengthened the balance sheet. In fact, net debt improved from £54.0m in June to £43.5m by August, comfortably within banking covenants. 

Finally wrt valuation, the stock at 348p/share trades on modest FY’27 multiples of 7.9x EBITDA, 10.7x EBIT and 12.3x PER. In comparison, my estimated fair value is 437p/share (see below). Moreover with private equity house DBAY recently snapping up a 10.1% stake, then I suspect they might be in the market again on any price weakness. 

Disclosure: Mpac Group is a Vox Markets client.