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MDM Engineering shares lifted by strong full-year results


Shares in AIM-listed MDM Engineering Group (LON:MDM) rose today in reaction to the company’s strong full-year results, which saw revenues and pretax profits soar.

The Africa-focused engineer and project manager for the mining industry said demand for its services remains robust despite a difficult global economic backdrop, and it has won more orders since its last trading statement in April, both in and outside South Africa.

By 2.10 pm, the stock was trading at 145.5 pence, up 6.6 percent on the day.  The group has seen a steady increase in its share price since the end of February, when the share was changing hands at around 95 pence.

Revenue in the year to end-March 2012 rose 428 percent from a year earlier to US$89.1 million, while pretax profit soared to US$7.8 million from US$ 2.1 million.

It is also raising the final dividend to 5.20 cents per share from 3.00 cents, taking the total dividend to 7.7 cents from 3.50 a year earlier.

Chief executive Martin Smith said: "We are very pleased to announce a strong set of financials to the market, which has been brought about by creating a strong business platform over the past two years. 

“(The latest orders) give us further confidence for the current financial year. We have every confidence in our future, as we look to continue to grow the business both organically and by complementary acquisition," he added.

City broker Canaccord Genuity issued a note on MDM today, reiterating its ‘buy’ recommendation for the stock, and increased its target price to 152 pence from 141 pence.

Analyst Michael O’Brien believes this to be conservative, given the lack of asset intensity and specific risk relative to the broader metals and mining sector.

“With an encouraging outlook statement we believe that MDM is well placed on the upgrade cycle. This is driven by ever improving utilisation of the cost base, a continued pipeline of feasibility studies which feed into project work and additionally, opportunities for corporate activity which in our view would likely strengthen either the geographical or technical exposure of the group,” O’Brien added.

The company provides a wide range of services from preliminary and final feasibility studies, through to plant design, construction and commissioning. To date, the Company's clients have largely been junior and mid-tier mining corporations with operations in Africa.

Among its current projects is a bankable feasibility study on African Barrick Gold’s Bulyanhulu gold tailings retreatment in Tanzania and an update of the BFS for Africo Resources’ Kalukundi copper/ cobalt project in the DRC, to name but a few.

Quick facts: MDM Engineering

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Market: AIM
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