The closure of construction sites and the inability to fit-out offices, together with increased costs associated with implementing safe working practices forced down Morgan Sindall’s (MGNS) operating profit by more than half during the first six months of the year. Management has reinstated pre-tax profit guidance for the full year at between £50m and £60m and average daily net cash “well over £100m”. The latter is down on the first-half figure – which benefited from the deferral of tax payments – due to plans to increase investment in partnership housing.
However, management is pointing towards a relatively quick recovery in capacity, with four of its five site-based business areas operating at between 90 and 100 per cent pre-Covid-19 productivity. Construction and infrastructure – which accounted for more than half of revenue – had a secured order book 12 per cent ahead of the end of December. Productivity constraints within the construction business meant the operating margin reduced to just 0.4 per cent, but management expects it to come in at no less than 1 per cent at the full year.
Peel Hunt forecasts adjusted pre-tax profits of £60m and EPS of 104p for 2020, rising to £82m and 140p the following year.
| MORGAN SINDALL (MGNS) | ||||
| ORD PRICE: | 1,166p | MARKET VALUE: | £536m | |
| TOUCH: | 1,160-1,166p | 12-MONTH HIGH: | 1,980p | LOW: 990p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 876p* | NET CASH: | £91m | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 1.42 | 35.5 | 62.9 | 21.0 |
| 2020 | 1.36 | 13.6 | 23.7 | nil |
| % change | -4 | -62 | -62 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £222m, 483p a share | ||||
