Monadelphous Group Limited, positive long term outlook

Team Veye | 22 Jan 2021 ASX - MND
Monadelphous Group Limited, positive long term outlook

Monadelphous Group Limited (ASX: MND)

Monadelphous Group Limited (ASX: MND) on 24 November 2020 provided the financial insights for FY20

Highlights From AGM Presentation on 24 Novermber 2020

  • Recorded a 2.6 %year on year increase in sales revenue to $1.65 billion.
  • The Maintenance division achieved a record revenue performance for the third consecutive year, exceeding $1 billion for the first time in the Company’s history. Revenue performance, was up by   5.1 percent on the previous year, to $1.05 billion.
  • The Maintenance division secured approximately $625 million of new contracts and contract extensions, including around $170 million subsequent to year end

(Chart source: TradingView)

  • The Engineering Construction division reported revenue of $616 million with a number of large resource construction projects started during the year.
  • The Engineering Construction division has secured around $715 million in new contracts and contract extensions, including approximately $155 million subsequent to year end.
  • Net profit after tax was $36.5 million
  • Earnings per share were 38.7 cents.
  • Cash balance reported at $208 million.
  • Final dividend of 13 cents per share fully franked, taking the full year dividend to 35 cents per share, which results in a dividend payout ratio in excess of 90 per cent.
  • Earnings before interest, tax, depreciation and amortisation was $92 million, Earnings in the second half were significantly impacted by the disruption caused by COVID-19, as well as disappointing levels of profitability experienced in the Company’s Water Infrastructure business and the costs associated with restructuring of the business.
  • Monadelphous maintained its position as a leader in its markets, securing approximately $1.34 billion in new contracts and further contract extensions from the beginning of the financial year, including around $325 million since June 30.
  • Secured a number of new contracts with Rio, including a three-year contract to provide maintenance services for fixed plant shutdowns at Rio Tinto’s Gove operations in the Northern Territory, and three master services contracts for the delivery of sustaining capital projects over three years across various Rio Tinto iron ore mine sites and port operations throughout the Pilbara(Data Source – Company Reports)


Veye’s Take

MND growth is underpinned by a number of strategic acquisitions, a solid pipeline of work and an exceptionally strong balance sheet. With an overall positive outlook for Australian iron ore investments and the renewable energy sector, the future growth of MND is quite positive; MND is expected to maintain its position as a leader in the renewable energy sector. The stock has maintained a “Higher High” formation on the charts. The formation of the “Pin bar” above the Bollinger band indicated some dips. The stock has covered the dips and held strongly above the middle band of the Bollinger. It is trading in a channel. RSI and MACD are in the positive zone supporting the upside move. Levels near $14.90 mark an important resistance zone. Veye recommends a “Buy” on “Monadelphous Group Limited” at the current price of$14.49


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