Mader Group Limited (ASX: MAD)
Mader Group Limited
ASX:
MAD
Mader Group Ltd. is a maintenance services company. It provides specialized contract labour for maintenance of heavy mobile equipment in the resources industry. Its services include maintenance labour, field support, shutdown maintenance teams, maintenance workshops, training of maintenance teams, and a range of other ancillary services. The company was founded by Luke Mader in 2005 and is headquartered in Perth, Australia.
Stock Performance Profile:
(Source: TradingView) One-Year Performance Profile of MAD compared to ASX 200 (XJO).
From the company reports:
FY24 Highlights:
Mader Group Limited (ASX: MAD) has recently released its financial results for the fiscal year 2024, concluding on June 30, 2024.
The company reported a record annual revenue of $774.5 million, surpassing its guidance and reflecting a 27% increase compared to the previous corresponding period. This growth is attributed to advancements across various industry sectors and geographical regions, emphasizing the benefits of a diversified revenue base.
The Group achieved an EBITDA of $99.2 million, marking a 32% rise from $75.1 million in FY23, with EBITDA margins improving from 12.3% to 12.8%.
Additionally, the net profit after tax (NPAT) reached $50.4 million, a 31% increase from $38.5 million in the previous fiscal year, with NPAT margins also showing year-on-year improvement from 6.3% to 6.5%.
The company reported a net debt of $31.2 million, indicating significant progress towards its medium-term goal of achieving a net cash position.
This outcome was supported by a robust cash flow conversion ratio of 88%.
Furthermore, a final fully franked dividend of 4.0 cents per share has been declared, bringing the total dividends for FY24 to 7.8 cents per share, which represents a 34% increase from FY23.
Historical Financial Snapshot:
(Data Source: TradingView. Graphic Source: Pristine Gaze)
The company’s growth path over the past few years has been remarkably positive and noteworthy. Specifically, revenues have surged from $273 million in 2020 to $774 million by 2024, while earnings have experienced a significant rise from $17 million to $50 million within the same period. Additionally, the company’s cash flows reflect considerable improvement, with cash generated from operating activities escalating from $20 million in 2020 to $68.7 million in 2024.
Growth Catalyst:
(Graphic Source: Company Reports)
The company exhibits a robust specialization within a distinctive and significant market segment, wherein it offers contracted labor for maintenance services related to heavy equipment. Consequently, the company has effectively penetrated the resource sector in Australia. The presence of a youthful workforce, coupled with a history of strong partnerships, creates optimal conditions for the company’s long-term sustainable growth. Furthermore, Mader’s strategic emphasis on both market and geographical diversification is particularly noteworthy, as the company’s revenues continue to rise not only in Australia but also on a global scale, especially in North America. Additionally, the expansion into new market segments and verticals is significant, particularly in light of the growing demand from the transport, logistics, and energy sectors.
Outlook:
The company is well-positioned for growth, supported by favorable market conditions that enhance its operational capabilities. It holds a positive outlook for both short-term and long-term expansion, projecting a revenue target of $870 million for FY25, with aspirations to reach $1 billion. Additionally, the company aims for a net profit after tax (NPAT) of $57 million. Historically, it has consistently surpassed its NPAT targets by approximately 40% annually, which is a promising indicator of its performance.
Technical Analysis:
(Graphic Source: TradingView) Mader Group Limited (ASX: MAD) Weekly Time-Frame (WTF) Chart.
Mader remains positioned above its 14-Day, 50-Day, and 200-Day Exponential Moving Averages (EMAs), indicating a favorable and sustained upward trend for the asset. Additionally, a 14-Day Relative Strength Index (RSI) of 50.71 reflects a balanced buying momentum in the market, suggesting potential for significant further appreciation.
Analyst’s Take:
Mader exhibits a robust and commanding presence within its operational domain, which plays a crucial role in preserving shareholder value over the long term. The company demonstrates strong prospects for revenue stability, while its growth potential remains highly attractive, particularly given its existing operational foundation. This potential is expected to be further enhanced through ongoing diversification and scaling initiatives. Additionally, Mader’s valuation has become more favorable compared to previous periods, primarily due to its impressive earnings growth; the price-to-earnings (P/E) ratio currently stands at 24x, a decrease from 30x observed in the last few years. Furthermore, the company has experienced significant distribution growth, with annual dividend payments increasing by 250% over the past five years, thereby providing healthy income generation for shareholders and indicating the possibility of continued improvements in the currently modest yield of 1.33%.
As per Pristine Gaze, you may consider a “Buy” on “Mader Group Limited” at the closing price of “$6.01” (As of 27 November 2024).
*All currency figures are in Australian Dollars unless stated otherwise.
*All data sourced from Company Reports and TradingView.
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