RE: RNS: $2.2m contract wins19 Apr 2023 11:52
Shore Capital's update today reiterates their 90p fair value target price and notes that their forecasts are conservative:
"Conservative forecasts:
We have consistently flagged over the last year that MTI has a very strong financial platform and seeks to grow sales both organically and through acquisitions, with any new business incremental to margins/profits. At the time of the FY22A results in March, we maintained our group forecasts for FY23F and FY24F and introduced numbers for FY25F. We continue to forecast sales and profit progress in each forecast year. Obviously, we have not assumed any further acquisitions in our forecasts, so given the company’s record of earnings-enhancing deals, we would view any M&A as likely to boost forecasts and shareholder value.
Outlook and valuation:
In the note we highlighted that each of the divisions has growth drivers with, in our view, Mottech particularly well placed to potentially see stronger demand than we forecast for its water management and control software as demonstrated by today’s contracts. Typically, the software improves the efficiency of irrigation systems, while reducing the cost of operating them. Summit/PSK had a strong FY22 and we would also expect to see good demand for its defence-related products and services Finally, the Antenna division is likely to benefit from the rollout of 5G across the world as it already supplies seven of the top ten operators with its technologies. We maintain a 90p fair value on the basis of a DCF analysis, which is corroborated by MTI achieving an FY23F EV/EBITDA multiple of 11.2x (the average of our peer group)."
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