MONADELPHOUS GROUP LIMITED (MND)



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General Information
Company Name: Monadelphous Group Limited
Stock Code: MND
Website: www.monadelphous.com.au
GICS Sub-Industry: Construction & Engineering
Market Cap ($M): 1,653
Equiv. Shares (M): 93

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 17.950 $ 17.900 $ 17.970 $ 17.870 $ 17.840 260,634 $ 0.110  0.617 %

Current Broker Consensus Recommendation more
Recommendation: Sell
Recommendation Date: 26th Mar 2014
12 Month Target Price (average): $15.891
Brokers Surveyed: 7

Company Overview

Business Description:
Monadelphous Group Limited (MND) is an Australian engineering group providing construction, maintenance and industrial services to the resources, energy and infrastructure sectors throughout Australia. MND has two divisions including Engineering Construction and Maintenance and Industrial Services. MND is headquartered in Perth, Western Australia, with a major office in Brisbane, Queensland the company has facilities, workshops and projects across Australia, China and Papua New Guinea.

Strategy Analysis:
Monadelphous strategic objective is to establish a resilient business through economic cycles with the ability to deliver quality earnings growth by the provision of contracting services to the resources, energy and infrastructure sectors. Diversification into the infrastructure sector is a well-considered strategy, which could eventually help to insulate it from an inevitable downturn in resource and energy project work. Engineering and construction contracting work prospects remain positive with a healthy forward work load combined with strengthening resources and energy project pipelines, should ensure high levels of tendering activity in the short term. But long term future growth is highly dependent on increasing levels of resource and energy sector activity and the flow of projects. Customers ultimately maintain strong bargaining power over Mondelphous due to an ability to substitute contractors. Monadelphous Group reported NPAT up 37.54% to $79.1m for the half-year ended 31 December 2012. Revenues from ordinary activities were $1.29bn, up 46.16% from the same period last year. This result has been driven by an extraordinary surge in construction work. Diluted EPS was 86.9 cents compared to 64.3 cents last year. Net operating cash flow was $43.35m compared to $68.41m last year. The interim dividend declared was 62 cents compared with 50 cents last year. Looking beyond the current financial year, after two consecutive years of growth of more than 30%, 2013/14 is currently anticipated to be a period of consolidation in which the achievement of any revenue growth will be challenging.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 120.4 131.4 -5.9 13.6 106.0 5.9 100.0
2014  F 128.0 139.6 -18.2 12.8 116.0 6.5 100.0
2013  A 156.4 170.7 22.4 12.5 137.0 6.4 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
Cardno (CDD) $1,140 M -0.1344 0.0051 0.1155 13.1574 13.0912 11.7362 0.0512 0.0558 0.0618
Leighton (LEI) $6,688 M 0.1277 0.1497 0.0387 13.1845 11.4678 11.0411 0.0531 0.0556 0.0578
Maca (MLD) $440 M 0.2568 0.0026 -0.0240 7.0615 7.0432 7.2165 0.0461 0.0559 0.0543
Monadelphous (MND) $1,662 M 0.2230 -0.1113 -0.1415 10.5130 11.8295 13.7785 0.0764 0.0683 0.0669
UGL (UGL) $1,167 M -0.4535 0.1561 0.1182 12.6671 10.9565 9.7987 0.0556 0.0000 0.0381

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
MND 1.06 11.5 5.27 10.00 0.63
Market 1.07 16.0 1.27 1.98 1.72
Sector 1.13 11.0 1.03 10.00 0.42

Directors
Name Position Start Date
Mr Calogero (John) Giovanni Battista Rubino Executive Chairman 18 January 1991
Mr Robert Velletri Managing Director 26 August 1992
Mr Peter Dempsey Non-Executive Director 30 May 2003
Mr Christopher Percival Michelmore Non-Executive Director 01 October 2007
Mr Dietmar Voss Non-Executive Director 10 March 2014

Management
Name Position
Zoran Bebic Chief Financial Officer,Company Secretary
D. Foti Executive General Manager, Engineering Construction
A. Erdash Executive General Manager, Maintenance & Industrial Services
Philip Trueman Group Financial Controller,Company Secretary

Substantial Shareholders
Holding Name
8,520,124 (9.37%) Mondrian Investment Partners Limited

Calendar of Events
Date Event
17 February 2015 Report (Interim)
14 October 2014 Report (Annual)
19 August 2014 Report (Prelim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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