MAAS Group Holdings Limited

MGH Details

SPP Update: MAAS Group Holdings Limited (ASX: MGH) is an Australian construction materials, equipment and services provider with diversified exposures across the civil, infrastructure, mining and property markets. Recently, the company has proposed an issue of 17,097,724 ordinary shares at a price of $5.50. Under the current Share Purchase Plan, MGH is seeking to raise A$15 million via an issue of around 2,727,272 shares at an issue price of A$5.50 per Share. The company recently entered into irrevocable agreements with a small number of sophisticated investors to subscribe for any shortfall in the current SPP.

FY21 Performance Highlights:

• The company has recorded a revenue of $277.6 million in FY21, up by 43.4% from $193.4 million in FY20, driven by an increase in Civil Construction and Hire (32.1%) and Real Estate divisions (39.6%)
• The company has declared a final dividend of $0.030 with a record date of 15 November 2021 and a payment date of 7 December 2021.
• MGH has reported EBITDA growth of 34.4% to $70.4 million in FY21 against $52.5 million in FY20, driven by continuous strong real estate demand within the regions with increasing sales interest.
• The company has incurred an NPAT growth of 67.1% to $34.7million in FY21, compared to $20.9 million in FY20.
• The cash position of the company stood at $17.99 million as of 30 June 2021.

Key Metrics (Source: Analysis by Kalkine Group)

Key Risks: The lockdown restrictions on national and international borders that caused a delay in projects significantly impact the company's operations, and still, the undercity prevails.

Outlook: Over the last twelve months, the company has added more than $22 million per annum EBITDA contribution on a proforma basis through acquisitions. The company expects strong demand for construction materials, real estate, Civil, Construction and Hire segments in FY22. The company’s Construction Materials segment is well positioned for continued growth, with product volumes expected to more than double over the next 12 months.

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: As per a recent announcement, the company has acquired the largest mixed-use development site in the strongly growing regional city of Dubbo, and that also brings redevelopment opportunities. The stock of MGH is trading above its average 52-weeks' levels of $2.300-$6.320. The stock of MGH gave a positive return of ~85.95% in the past six months and a positive return of ~105.68% in the past nine months. On a technical analysis front, the stock of MGH has a support level of ~$4.64 and a resistance level of ~$6.32. The stock has been valued using a P/B multiple-based illustrative relative valuation and has arrived at a correction of low single-digit (in % terms). The company might trade at a slight premium to its peers’ average P/B (NTM trading multiple), considering the impressive financial performance and higher net margin. Considering the current high trading levels, recent rally in the stock price, volatile demand for manufacturing materials in global markets, the uncertainty of the COVID-19 pandemic and the key risks associated with the business, we suggest investors to book profit and give a 'Sell' rating on the stock at the current market price of $5.550, as on 13 September 2021, 10:00 AM (GMT+10), Sydney, Eastern Australia.

MGH Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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