9th May 2022 13:26
(Alliance News) - Mincon Group PLC's "effective" management and "attractive" end markets were on full show on Monday as the Irish rock drilling tool manufacturer reported of strong underlying demand.
Mincon said the positive momentum seen in the second half of 2021 has continued into the first quarter of 2022, which ended on March 31.
Shore Capital analysts Akhil Patel and Robin Speakman said: "We believe management's effective strategy, resilient business model and Mincon's significant relevance and market positions across its attractive end markets, come to the fore.
"Mincon has the competitive benefit of a strong balance sheet combined with advantageous product characteristics servicing its sector clients, so we believe it is very well placed to take advantage of the long-term structural growth drivers going forward."
Mincon noted its first quarter momentum was driven by strong underlying demand for its products across the Construction, Mining and Waterwell/Geothermal units. It expects "significant" growth in its three industries against the first quarter moving forward.
Shore's Patel and Speakman added: "We believe Mincon is set to benefit or take advantage of the strong structural market drivers across its attractive and growing global end markets. Thus, we expect to see good revenue growth and margin expansion opportunities beyond 2022 and for that to drive higher earnings quality, which should ultimately underpin a higher valuation, in our view."
Mincon did say manufacturing remains under pressure, but added it has increased capacity through investment in factories and through acquisitions. It also believes raw material supply challenges will ease.
Irish stockbroker Davy added: "Our current expectations for Mincon for the full year include 11% revenue growth and Ebitda margins unchanged relative to 2021 at 18%. Based on today's update, we are comfortable that this is a reasonable base case for the current year, and we are unlikely to materially change estimates on the back of it."
In 2021, Mincon's pretax profit increased 4.4% to EUR17.8 million, on revenue which expanded 11% to EUR144.4 million.
Mincon was trading 6.9% higher in London on Monday at 108.99 pence each, but shares have slipped 6.0% so far in 2022.
Shore and Davy act as joint brokers for Mincon.
By Paul McGowan; [email protected]
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