Research Note30 Mar 2021 07:35
There is some scepticism that the best engineering companies could consistently expand the top line at 10%+ organically, whilst delivering 10%+ EBIT margins over the economic cycle. This rarely happens, but due to astute foresight, attention to detail & almost flawless execution, we think {{linkedin_mention(urn:li:organization:75780|Mpac Group plc)}} has every chance of breaking the mould.
Helped not only by its 100% exposure to the expanding healthcare, food/beverage and pharmaceuticals industries, but also the secular tailwinds of Ecommence, Industry 4.0, ageing populations, premiumisation, reshoring, biodegradable/recyclable materials and consumer convenience. Elsewhere there are other exciting prospects. Not least in craft beers (re post £10m Switchback acquisition in Sept’20), alongside designing state-of-the-art packaging equipment to manufacture Covid tests and/or vaccine vials, which could add further juice.
Therefore irrespective of the recent price appreciation – we believe there’s still plenty to go for. Lifting our valuation from 445p to 600p/share, yet equally acknowledging that if Mpac can achieve it’s “10+10” target, then the stock would rightly deserve at least a market multiple, driving it to possibly >£10 by 2023.
https://www.equitydevelopment.co.uk/research/strategic-progress-drives-valuation-to-600p/share