Morgan Sindall (MGNS) was relatively unperturbed by the weak construction backdrop in 2019. Benefiting from its selective approach to contracts and improved operational delivery, the largest division, ‘construction and infrastructure’, saw adjusted operating profit jump a fifth to £32.3m. Construction margins increased by 0.4 percentage points to 2.8 per cent, within the medium-term 2.5-3 per cent target range.
Chief executive John Morgan sees most potential in partnership housing: “my hope is that in five years’ time it will become the most profitable segment”. With average capital employed increasing almost a third to £152m, adjusted operating profit surged 50 per cent to £18.3m and return on capital employed (ROCE) came in at 12 per cent. Average capital employed is expected to rise to £200m in 2020, limiting short-term progress towards the 20 per cent ROCE target.
Average daily net cash rose 10 per cent to £109m, but with higher anticipated investment in partnership housing in 2020, this is expected to fall to around £60m. It’s worth noting that original 2019 guidance was for at least £70m and this was upgraded three times throughout the year.
Peel Hunt forecasts adjusted pre-tax profit of £95m and EPS of 164p in 2020, rising to £99m and 169p in 2021.
| MORGAN SINDALL (MGNS) | ||||
| ORD PRICE: | 1,968p | MARKET VALUE: | £889m | |
| TOUCH: | 1,966-1,970p | 12-MONTH HIGH: | 1,954p | LOW: 1,057p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 878p* | NET CASH: | £133m** | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 2.38 | -14.8 | -23 | 29.0 |
| 2016 | 2.56 | 43.9 | 84 | 35.0 |
| 2017 | 2.79 | 64.9 | 119 | 45.0 |
| 2018 | 2.97 | 80.6 | 150 | 53.0 |
| 2019 | 3.07 | 88.6 | 158 | 59.0 |
| % change | +3 | +10 | +5 | +11 |
| Ex Div: | 23 Apr | |||
| Payment: | 19 May | |||
| *Includes intangible assets of £224m, or 495p a share | ||||
| **Includes lease liabilities of £59.7m | ||||
