30 March 2021
By Maynard Paton
Results summary for Mincon (MCON):
- Acceptable pandemic progress, with underlying revenue up 6% and profit up 28% due almost entirely to margin improvements.
- Strategic efforts to sell drills direct and supply the construction market seem to have borne fruit and underpinned the higher earnings.
- A margin comparison with larger rivals raises questions as to whether MCON’s products enjoy an indisputable competitive ‘moat’.
- Rising costs and enormous stock levels raise further questions about the group’s underlying economics.
- New products expected to “transform” drilling plus a desire to “innovate and disrupt the market” might justify the 19x-plus P/E. I continue to hold.