Morgan Sindall Live Discussion

In_the_dark_yet_again 07 Jan 2020

Latest Results LSE:MGNS OK, up again. But now even I’m beginning to think. The promise was always here as long as they could sort the margin issue but I don’t know how much more is achievable. I never sell on an up tick nor buy on a down but the stop is up to 1525 now. Ride your winners but drag the stop up behind. Regards, ITDYA

In_the_dark_yet_again 07 Aug 2019

Latest Results LSE:MGNS [link] Another very decent set of numbers. Revenue pretty much unchanged but margin up again on the core infrastructure stuff, this time up to the heady heights of 2%! It’s still a bit thin for my liking but clearly shows how even just small increases have a significant impact on the bottom line. And, hopefully room for more. But, as with everything else, Brexit weighing heavy - no one really know what will actually happen or quite how big an impact it will have but, for me, the harder the Brexit, the worse for the economy for the next 10 to 15 years. The market never likes uncertainty, always sees it as extra risk so always want more reward. Regards, ITDYA

In_the_dark_yet_again 08 Aug 2018

Latest Results LSE:MGNS I think it’s a really good set of numbers. The small decline in the construction infrastructure order book doesn’t bother me in the slightest as it’s offset by a significant rise in the margin - I know even at 1.7% it doesn’t leave much room for error but far better than the 1% (or sometimes 0.5%) they had been eking out in recent years. They were always winning too many contracts on too low a margin IMO so forcing through slightly higher prices at the cost of losing a few (all but unprofitable?) contracts is exactly what I’ve been saying I wanted to see. I know, not a like for like competitor, but I wonder if Carillion going to the wall has helped with the better margins? Everything else looks pretty rosy to me… looks like we may almost be back to where we were 10 11 years ago! There have been some dark days in meantime! Regards, ITDYA

Bowman 08 Aug 2018

Latest Results Results RNS These HY 2018 results do not look too bad, and the 19% dividend rise is quite reasonable. However the declining order book might indicate the potential for problems later, even if “the Group is on track to deliver a result for the year which is slightly ahead of its previous expectations”. We will see how the results go down when the markets open. The SP jumped yesterday, which might indicate a slight leak of the data, so potentially we might see a drop in the opening sp.

In_the_dark_yet_again 09 Jul 2018

Time to cash in? @bowman LSE:MGNS 1370 and still falling then again I’ve never had much faith in analysts; Liberum seem no better than any of the rest to me. I guess if you give it long enough and there’s no Carillion scale mishap in the meantime £17.50 will indeed be achieved but how long will that take? Regards, ITDYA wishing I’d sold a few more the other week but, not having a time machine, going to stick with what I have left for the moment.

Bowman 28 Jun 2018

Time to cash in? from my Citywire email this morning. Liberum backs ‘secure’ Morgan Sindall Construction company Morgan Sindall (MGNS) is heading for a strong year and Liberum says its cash position makes it ‘more secure’ than its peers. Analyst Joe Brent retained his ‘buy’ recommendation and target price of £17.50 on the stock after first half results ‘should make the full year more achievable’. Although Brent believes the order book will fall from £3.8 billion at the full year to £3.6 billion ‘we do not see this as a concern given management’s focus on operational excellence rather than volumes’. ‘Morgan Sindall trades on a current year 2018 price/earnings multiple of 10.5…and a dividend yield of 3.5%…dividend cover of 2.7 times is slightly above the sector average of 2.4 and we see it as more secure than some of its peers given the better financial position due to the cash [and] minimal pension obligations,’ he said. The shares shed 0.4% or 6p to £14.50.

r21442 10 May 2018

Tip update in IC 11-May Office fit-out has continued to deliver for Morgan Sindall (MGNS). The division has continued its winning run by making a strong start to the year, so strong in fact the specialist construction group has raised expectations for the full year. Management had previously forecast a dip in profits from the division this year.The performance has been confounding due to the strong showing from the London office sector, which many assumed would be damaged by the result of the EU referendum. Nervousness persists, with analysts predicting a drop in profit from the division, or at least a rapid deterioration in growth. But analysts at Peel Hunt raised 2018 EPS estimates by 6 per cent and now expect 134p with pre-tax profit of £77.5m.Using the new estimates, shares in Morgan Sindall now trade at 10 times forecast earnings, which looks attractive – and with improved prospects we stay buyers at 1,320p. Buy.

r21442 23 Feb 2018

Numis has upgraded ‘cheap’ Morgan Sindall (MGNS) on the back of almost 50% profit growth and faith the construction company can continue the momentum.Analyst Howard Seymour upgraded his recommendation from ‘add’ to ‘buy’ with a target price of £15.65 after the company delivered 46% profit before tax growth in its full year results. The shares were up 10p at £12.44 yesterday.‘We think that the strength of the order book and the prospect of further margin growth suggests profits can continue to progress strongly from here,’ he said.‘With the shares trading on sub 9x price/earnings and the group boasting a net cash balance sheet, we think Morgan Sindall is materially too cheap.’

r21442 22 Feb 2018

IC reiterate buy This was another outstanding performance from Morgan Sindall (MGNS), as the specialist construction group ticked all the important boxes in 2017, and shareholders were rewarded with a significant increase in the dividend.Office fit-out was again a very strong performer, with adjusted operating profit up 42 per cent and margins up from 4.3 per cent to 5.3 per cent. And despite all the Brexit generated gloom, the London region accounted for 71 per cent of revenue, up from 65 per cent a year earlier. In construction and infrastructure, revenue grew by 6 per cent but adjusted operating profits more than doubled. And while the committed order book fell 2 per cent, this reflected a more selective approach to taking on new work, and operating margins more than doubled to 1.5 per cent. Partnership housing pushed profits marginally ahead, with lower-than-expected sales completions more than offset by a 27 per cent jump in contracting revenue, including planned maintenance and refurbishment. Property services boosted revenue by a fifth, but there was an operating loss of £1.3m relating to one-off costs associated with its legacy insurance service and the streamlining of its contract portfolio.Analysts at Numis Securities have upgraded their forecasts, and now expect adjusted pre-tax profit for the year to December 2018 of £73m, giving an EPS of 132p.A strong order book, improving margins, very strong cash flow, and trading on less than 10 times forecast earnings makes shares in Morgan Sindall – up over 4 per cent on these numbers – look cheap, and we’re sticking with our buy recommendation (1,370p, 28 Sep 2017). Buy

sparks1962 22 Feb 2018

Managing Expectations Whilst the headlines were the very impressive revenue growth and significant increase in margins from the C&I and Fit Out divisions which contribute the vast majority of profit for the company. I was a little concerned at the lack of comment beyond 2018. I think the less risky procurement of construction and hopefully infrastructure projects will for 2018 help to increase margins towards 2020 targets. However Fit out was not expected to achieve the £39m profits of this period as expectations were only to exceed upper range of £25-£30 m.The shares have taken a hit since the end of last year so todays bounce is welcome, but I wonder just how long it will last.

r21442 02 Nov 2017

Numis Numis has upped its estimates for construction group Morgan Sindall (MGNS) again but says the shares are still not looking very expensive.Analyst Howard Seymour retained his ‘add’ recommendation and target price of £15.65 on the shares, which jumped 3.6% to £14.95 yesterday.‘Another upgrade is worth putting in context,’ he said. ‘Since the start of 2017, we have upped profit before tax estimates by c.25% and average daily net cash expectations by over £100 million.‘This reflects an enviable mix of market strength in fit out, management actions in construction and infrastructure, and benefits of investment using the balance sheet in urban regen and partnership housing.’He added that the shares ‘do not look expensive on fundamentals’ and that there was still ‘significant upside’.

r21442 28 Sep 2017

Tipped again in IC tomorrow IC Tip: Buy at 1370pTip styleGROWTHRisk ratingMEDIUMTimescaleMEDIUM TERMBull points Record order bookNet cash balanceDiverse revenue streamSignificant investment in social housingBear points Construction margins still modestLumpy mixed tenure revenue streamMorgan Sindall (MGNS) benefits from diverse revenue streams from four divisions that cover fitting out offices (fit-out), urban regeneration, partnership housing, and construction and infrastructure. With all these divisions performing strongly, a record forward order book worth £3.8bn, and plans to use a strong balance sheet to grow high-return activities, we rate the shares a buy.Adjusted pre-tax profit at the June half year were up by 47 per cent to £23.7m. Particular encouragement came from the cyclical fit-out business, which accounts for nearly a quarter of sales and 43 per cent of operating profit. The division's profit rose by more than a quarter in the first half and operating margins rose from 3.9 per cent to 4.3 per cent. There should be more to come because the forward order book rose by 22 per cent to a record £568m. Just over half of this will be worked on in the second half, but the remainder secures work through to 2019, giving plenty of earnings visibility. However, the real focus for growth is the company's partnership housing and regeneration businesses, both of which accounted for 21 per cent of profit last year and a 17 per cent and 6 per cent of turnover, respectively.Partnership housing is being supported by a push for more social housing. Key projects include a £46m regeneration scheme at Ponders End in partnership with the London Borough of Enfield to build around 160 affordable and open market homes. Capital employed averaged £96.4m over the 12 months to the end of June and management plans to increase this to £250m over five years. All the better then that return on capital employed (ROCE) in the first half rose from 8 per cent to 15 per cent. And following a relatively slow first half for the division, a pick-up is expected in the final six months of the year.A strong second half is also expected for urban regeneration where the timing on project completions saw operating profit down from £4.6m to £2m, although this is expected to recover in the second half. Here ROCE was 12 per cent in the first half and average capital employed of £79.4m is earmarked to almost double over five years to about £150m.The construction and infrastructure division (half of turnover and 14 per cent of profit last year) has had its problems, with overcapacity driving margins down to wafer thin levels. However, legacy issues have now been resolved, and adjusted operating profit in the first half more than doubled to £7.6m. Operating margins remained low, but showed an impressive improvement from 0.5 per cent to 1.1 per cent. The construction order book was down 10 per cent at £529m, but this was the result of being more selective on contracts, with greater attention paid to risk management. On the infrastructure side, work secured includes a £100m joint venture to repair the M5 motorway Oldbury viaduct, while work has also started on a seven-year joint venture valued at around £500m to deliver the western section of the Thames Tideway tunnel.Both the fit out, and construction and infrastructure business operate with negative capital employed due to high material costs and favourable payment terms to suppliers. That means the groups net cash needs to be seen in the context of £89m of negative working capital. Nevertheless, the balance sheet is in good shape with average daily net cash in the first half of £132m compared with average net debt of £24m in the same period last year. And there is also a new £180m five-year revolving credit facility which the company has yet to draw on.IC ViewWith greater investment, profit is expected to rise significantly over the next few years, with plenty of earnings

malkis 08 Aug 2017

Good RNS.....I'll repeat G L A HOLDERS MGNS has got much more in the tank.. I M H O ..... I'LL HOLD LONG TERM .Warm regards Malkis

r21442 27 Jul 2017

Tip of the week in IC tomorrow It’s unusual for Morgan Sindall (MGNS) to put out a trading update so near to the release of its first-half results (due on 8 August), but it must have been difficult to hold back the good news. As a result of buoyant trading, profits for the six months to June are expected to be up by around 45 per cent from the previous year, to about £23.5m. And with a second-half weighting for the partnership housing business, full-year profits are expected to be significantly ahead of previous expectations.Several factors contribute to this impressive growth. The fit-out division is one of the key contributors. This was a surprise because although, a year ago, the company revealed a record order book, in the wake of the EU referendum management was understandably cautious. If companies started to leave the UK, demand for office fit-out would diminish. However, this simply hasn’t happened.There has also been a general improvement in profit margins, notably on the construction and infrastructure side, although these are still modest. Morgan Sindall has avoided the troubles seen at some of its competitors by tackling its problems at an early stage, addressing unattractive contracts and being much more selective about the work it takes on. Another by-product of this has been cash generation, with net cash at the half year standing at £97m.Morgan Sindall has a diverse revenue stream, operating through six divisions. These comprise construction and infrastructure, fit-out, property services, partnership housing, urban regeneration, and investments. On the infrastructure side, it specialises in civil engineering services, such as tunnelling, utilities, and mechanical and electrical services. The secured order book has been growing steadily and includes work on the HS2 rail link, which will be worth around £100m over four years. Work on the next phase of the Sellafield site in Cumbria has benefited from a five-year extension, and this could be extended again to give a total value of £1.1bn. And more recently it won a two-year extension on a framework agreement with Western Power Distribution for excavation and cable laying work. There is also work secured on upgrades at Heathrow airport and tunnelling work for London Underground. A clear characteristic of all these contracts is that they provide long-term revenue visibility.Profit margins tend to be relatively low; the medium-term target in construction is 2 per cent and 2.5 per cent in infrastructure, but reaching these targets has been helped by maintaining a much higher-quality order book. Improvements have also been made in operational delivery on the construction side. Much of this has been made possible by having experienced management, with chief executive John Morgan having been at the helm for 23 years, having co-founded Morgan Lovell in 1977 before a reverse takeover into William Sindall formed the current group.Urban regeneration work has been expanding significantly, with revenue in 2016 up 42 per cent from a year earlier. Residential sale completions last year totalled 566, highlighted by the regeneration of Lewisham Gateway in south London, where two residential developments were completed and all 193 units pre-sold.Revenue diversity gives Morgan Sindall considerable protection from pressures within any one of its divisions. That said, the group would naturally feel the effects of weak economic conditions that caused a reduction in infrastructure spending.IC ViewMorgan Sindall has worked hard to improve the quality of the work it takes on. And the benefits are showing through. It started the year with around £380m of construction work on site, and another £380m started subsequently. Profits on the construction side tend to fluctuate, influenced by the timing of completions, but the medium-term target for construction is to achieve a return on capital towards 20 per cent. Long-term work includes building schools, and securing investment partners on suc

II Editor 21 Jul 2017

NEW ARTICLE: Stockwatch: This share stays on the 'buy' list "Is there further upside for £575 million, construction and fit-out group LSE:MGNS:Morgan Sindall ? After three years of trading in a volatile-sideways range of about 560p to 850p, the FTSE Small-cap stock has broken out dramatically this year - ..."[link]