Summary: MCON extended its bumper 2017 progress with some very satisfactory first-half figures. The specialist drill manufacturer claimed greater orders from the mining sector had supported 12% organic sales growth, while my sums suggested a robust 19% operating margin was reached during the second quarter. In addition, current trading appears healthy and a recent acquisition may have performed much better than expected. However, a P/E in excess of 20 probably reflects all of the positives, especially given cash conversion remains below par. I continue to hold.
Summary: MCON’s subdued years of 2014, 2015 and 2016 now seem long forgotten after the mining-drill manufacturer confirmed a bumper set of 2017 numbers. Greater client activity has now fuelled director talk of “significant opportunities” and “the first year of the current upturn”, and the share price has naturally climbed to a premium level. Meanwhile, the accounts remain cash-rich, several factors may be suppressing certain ratios, and even the standstill dividend has been lifted. I continue to hold.
Summary:A very welcome set of results, which I calculate included the drill specialist’s best-ever quarter as a quoted company. Revenue and profit enjoyed significant advances, and it appears the group’s mining customers are now happy to place greater orders following the sector downturn of the last few years. Also pleasing was the improvement to cash flow and the possibility of certain new projects providing further “meaningful” growth. I continue to hold. Continue reading →
Summary: These were quite reasonable results, given MCON is still plugging away serving the subdued mining sector with its heavy-duty drills and bits. The introduction of a new accounting policy was disappointing, although the chief exec’s bullish commentary was encouraging and suggested the group’s expansion could accelerate in the years to come. Such growth ought to improve MCON’s rather average margin and return on equity numbers — at present those ratios may not be doing justice to the group’s competitive position. I continue to hold. Continue reading →
I trust you enjoyed the festive break and are now raring to do battle with the market for another twelve months!
This first Blog post of 2017 provides a ‘year-in-review’ of my current portfolio holdings. I recap how each of the underlying businesses performed during 2016, as well as provide a few remarks about valuation.
As I mentioned this time last year, I find writing such reviews extremely useful — not least because it encourages me to double-check my investment logic to ensure I am still invested for all the right reasons! Continue reading →
Summary: A satisfactory set of results, which I reckon included the drill specialist’s best quarter as a quoted company. Revenue and profit continue to head the right way, although working capital and other investments absorbed considerable cash flow. Notable positives from the statement included comments on new product development alongside vague talk of recovering demand from mining customers. I continue to hold. Continue reading →
Summary: A satisfactory set of results from this specialist drill manufacturer. Sadly the bumper Q3 reported in November was followed by a more subdued Q4, so I’ve had to trim my valuation estimates a little. Nonetheless, the shares do not appear outlandishly valued and I’m hopeful the stronger second-half bodes well for 2016. The books are still cash rich and management has started to improve cash flow, although the dividend remains at a standstill. I continue to hold. Continue reading →
Summary: A very pleasant statement from this drill manufacturer, which confirmed earlier trading improvements had been sustained. Indeed, revenue, profit and — very importantly — cash flow, all advanced to seemingly defy the mining-sector downturn. I just wonder if the recent appointment of Joe Purcell, son of the group’s founder, as chief exec has had an immediate impact. Profit extrapolations are now showing an interesting valuation and I continue to hold.
Summary: These figures were not too disappointing given MCON’s lacklustre first-quarter statement. A definite improvement occurred during Q2 and 15% margins suggest MCON retains a respectable competitive position. Nonetheless, the firm’s acquisition strategy remains unproven and working-capital demands are still very high. While a P/E valuation of 12-14 does not tempt me to top up, I continue to hold.
Summary: A lacklustre Q1 update. Although underlying revenue managed to remain flat, margins have slumped as MCON’s drills and bits continue to face pricing pressure. I reckon the group’s Q1 profits may have fallen by 24%, while the net cash position is somewhat lower, too. I just hope the inherent strengths of this business can show through during the rest of 2015. I continue to hold.
Today I’m revealing one of the two new investments I’ve made during recent months.
The company in question is Mincon (MCON), a specialist engineer that designs, manufactures and sells drilling equipment for miners. I bought the shares during February and March 2015 at an average of 44.6p including all costs. The mid-price is now 54p.
All told, I feel this £114m Irish business is an excellent fit for my portfolio. Important attractions include a respectable competitive position, high margins, a cash-flush balance sheet and very favourable family management. A languishing share price and a possible P/E of just 10 also clinched it for me.
However, MCON is by no means perfect. In particular, the group is dependent on the vagaries of the mining sector, has an ambitious acquisition plan and does not boast the greatest of free cash flow.
A wide bid-offer spread and 71% boardroom ownership may put some people off, too.