Tag Archives: morgan sindall

London-based Morgan Sindall Plc, (MGNS.L) is engaged in construction and regeneration via five operating divisions: Fit Out, Construction, Infrastructure Services, Affordable Housing, and Urban Regeneration. The Fit Out division involves in the refurbishment and fit out of office accommodation. It also fits out and refurbishes hotel, retail, leisure, and education facilities, as well as supplies and installs commercial office furniture. The Construction division engages in construction activities ranging from small works, repair, and maintenance services to large scale complex projects in the airport, defense, commercial, education, industrial, healthcare, leisure, and retail sectors. This division also offers management services to the manufacturing, environmental, nuclear, transport, and public sectors. The Infrastructure Services division designs and delivers complex projects in the road, air, rail, water, and energy sectors; maintains utility networks in the water, gas, and electricity sectors; and offers tunneling services, as well as provides project, program, and integration management consultancy services. The Affordable Housing division develops, constructs, and refurbishes social and open market affordable housing in England, Scotland, and Wales. The Urban Regeneration division develops large-scale mixed use urban regeneration projects in the office, industrial, residential, leisure, and ancillary retail sectors.

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On May 4^th 2017, MGNS issued a trading update with its AGM statement. The Company said trading for the financial year to date has been strong, with the positive momentum entering the year continuing throughout the period. Each division has performed as expected, with the overall Company result being driven by further margin and profit growth in Fit Out and the expected margin improvement in Construction & Infrastructure. The committed order book as at 31 March 2017 was up 5% to £3.83bn from the year-end position, while the regeneration & development pipeline was up 2% to £3.28bn. Also at 31 March, the Company had net cash of £115m, with an average daily net cash from the start of the year to 31 March of £154m, higher than previously expected due primarily to better working capital management in Construction & Infrastructure and Fit Out. As a result, the Company now expects that the average daily net cash for the year will be in excess of £50m and, consequently, the net interest charge for the year will be lower than was previously anticipated. Accordingly, MGNS is on track to deliver 2017 full year results slightly ahead of its previous expectations set at the 2016 full year results on 23 February 2017.

While MGNS has long been a favourite of the VectorVest team, the company continues to grow at pace, thanks to an exceptionally strong set of metrics. The VectorVest GRT (Earnings Growth Rate), which reflects a company’s one to three year forecasted earnings growth rate in percent per year, currently shows forecasted GRT for MGNS of 27.00%, which VectorVest considers to be excellent. In addition, the VST – the VST-Vector master indicator for ranking every stock in the VectorVest database, logs MGNS at 1.48, which is excellent on a scale of 0.00 to 2.00. From a valuation standpoint, VectorVest logs a current rating of 1,741p per share, indicating MGNS is significantly undervalued at its current 1,252p.

The chart of MGNS.L is shown above where the price is plotted in candlestick format. The green line study above the price is the VectorVest calculated valuation while the blue line study in the window below the price is earnings per share (EPS). The trend as defined by Charles Dow is upwards. This is shown by the series of rising bottoms charted by the price.

Of note is that the last swing low charted on the 22^nd May is considerably higher than the swing high charted on the 26^th April. Mr Dow defined this as a “strong trend” as the market failed to retreat to a point where the last resistance became support. This is very positive and the probabilities both technically and fundamentally favor a breakout of the 52 week high soon. The share has been on a VectorVest Buy recommendation since late December 2016.

Summary: There is a sense of an almost unstoppable growth momentum at MGNS, with clear visibility in earnings growth thanks to bursting forward order books. Added to this, the Company enjoys a continual strengthening in its daily net cash position, something most companies can only dream of. As such MGNS takes its rightful place on the VectorVest shortlist of top growth company picks.

David Paul

June 7th 2017

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