Offering real value
Recent share price weakness stemming from the delayed introduction of a new regulatory regime for tobacco products in the US has been reversed following strong 2013 results. The shares look undervalued on the performance of the Molin Plc’s, (MLIN.LN) engineering businesses alone; the mediumterm potential from Scientific Services adds significantly to the potential.
Profits ahead of expectations
Results for the year to December 2013 show underlying pre-tax profits up by 10% to£5.4m, some £0.2m above City expectations. Progress was delivered in each division, although the product mix and uneven factory loading in Packaging Machinery contributed to a small reduction in gross and operating margins. Earlier hopes that the new tobacco products regulatory regime in the US would boost the performance of the laboratory business were not fulfilled, although the shortfall was more than balanced by progress in the machinery manufacturing businesses.
Potential in all divisions
There is a clear growth strategy for each division. In Scientific Services, the product range continues to widen at Cerulean, while the major investment in Arista Laboratories offers significant potential for when the new US regulatory regime is clarified. Organic growth remains the key in both machinery divisions; each is developing important new products, while there is added potential from the new Singapore office for Packaging Machinery. The balance sheet remains very strong; although net funds were reduced modestly to £5.2m (25p per share), a sharp reduction in the pension deficit helped lift shareholders’ funds by £10.0m to £40.5m. Molins is also well able to support its acquisition ambitions.
Profit estimates raised
Estimates have been raised modestly following the results announcement, although the indicated higher tax charge means that EPS will fall in 2014. These estimates look conservative, especially if the FDA demands further testing during 2014.
To Read the Entire Report Please Click on the pdf File Below