The Creme de la Creme of Resource & Infrastructure Engineers

Monadelphous works for the majors in resource and infrastructure EPCM projects, typically called in where the top priorities are safe and timely delivery to specification.

Thus MND is appointed by BHP, RIO and other blue chip clients, again and again. To keep this swan-like reputation of course one often needs to paddle furiously under the water, and the P/E rating and risk may be higher than some would prefer, but you generally pay for quality. With Australia not as immune as we would like from the European malaise, showing lack of productivity growth and suffering from a high exchange rate, any investment has its worries. But there is no doubt we are a two (some say three) speed economy and this is likely to continue. Monadelphous is very obviously in the top gear area.

The above was written in 2012, before MND gave at the half-year results clear warning of the slowdown of resource development work. MND confirmed that FY13 would continue with a strong, in fact a likely record H2, but that visibility thereafter was low and revenues were likely to reduce considerably with a direct impact on profits.

Half-year Performance & Estimates - MND

Year-end June	1H12A	FY12A	1H13A	FY13A	1H14A	FY14E	FY15E
Sales, $m	879.5	1,898	1,289	2,614	1,277	2,328	2,174
EBITDA, $m	89.7	196.5	125.3	247.1	121.4	217.6	199.6
EBIT, $m	76.9	167.8	110.2	217.2	107.4	190.2	173.9
Report NPAT, $m	57.6	126.0	79.1	156.4	79.2
Adj. NPAT, $m					79.2	138.4	127.3
Reported EPS, ¢	64.00	142.00	87.00	171.00	86.00
Adjusted EPS, ¢					86.00	150.10	136.30
EPS %FY/Growth	45%		51%	20%	-1%	-12%	-9%
Dividend, ¢	50.0	125.0	62.0	137.0	60.0	120.00	110.90
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	0	10%	10%	9%	10%	9.3%	9.2%
NPAT Margin	0	7%	6%	6%	6%	5.9%	5.9%
ROE, %	0	51%	28%	51%	23%
EBIT/Interest	0.0	-51.3	-6.0	371.2	189.8
Net Debt / Equity	0	-0.62	-0.45	-0.46	-0.54
CashFlow/Sh, ¢	77.2	156.7	48.6	125.3	85.1	186.9	167.3
Y/E Shares, m	88.7	88.7	90.7	91.0	92.3

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns except the first half years which show their percentage of full year EPS. In a handful of cases, unadjusted share splits, or changes between positive and negative values, may give strange changes in ratios.

Recent News Highlights

As at 31/12/2012 : see details at www.monadelphous.com.au   (new window? Shift+Click)

23/11/2012     Secures QCLNG Maintenance Contract

20/11/2012     AGM and Updated Outlook

09/11/2012     Secures Facilities Management Extension and (6 Nov) Major Coal Construction Contract

31/10/2012      Secures Karratha Gas Plant Services Contract and (24 October) Contracts Update

16/10/2012     Annual Report

30/08/2012     Secures Contract at Jimblebar

17/02/2012     Two milestone framework agreements with RIO (non-exclusive): as preferred contractor on structural, mechanical & piping, and on electrical & instrumentation work on iron ore projects

06/02/2012     Sells off 14% stake in Norfolk (NFK), for $24.4m; cost $8.2m, mainly February 2009

30/01/2012     $180m water transmission & pipeline contracts with RIO and Chevron-Gorgon

24/01/2012      Market Update

23/12/2011      Awarded Iron Ore Construction Contract

22/12/2011      Muhibbah Marine JV Awarded $330M WICET Contract

16/12/2011     Awarded $70 million Wheatstone Contract

22/11/2011     2011 AGM Chairman and MD`s Address & Presentation

18/11/2011     Monadelphous Contracts Update

Russell Research in the media

Stock Picks for Sunday Herald Sun – 2 June 2013

HOLD Monadelphous Group Limited, MND, $15.87

The price of this engineer to the resource majors has fallen by more than a third in 2013. Highly resilient, add for strong yield and longer term recovery.

In a note written for TheBull.com.au on 17 October 2011 we said:

High Sustainable Dividend Yields, Low Debt, Solid Growth

Monadelphous Limited (MND, $18.92 on Friday 14 Oct)

Monadelphous is a leader in building and maintaining projects for world class operators across mineral resources (notably iron ore), oil and gas and infrastructure. This ASX-200 Index stock has an envied reputation in the continuing themes of Australia’s growth. Its leadership team has produced a decade of year-on-year records despite the GFC. In the year ended June 2011, revenue rose 13.2% to $1,440 million, EBITDA 14.5% and net profit 14.2% to $95.1 million. EPS rose 12.4% to 108.8¢ and dividends 14.5% to 95¢. We expect annual EPS growth of over 12% for at least the next three years, giving a yield of 5.5% franked this year, rising towards 7%. This is underpinned by the asset-light balance sheet which had net cash of $130 million at 30 June.

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Company Overview

See general background above.