Morgan Sindall Group PLC (LSE:MGNS), the construction and regeneration group, is trading substantially ahead of pre-pandemic levels.
Revenue in the first half of 2021 rose 14% to £1.55bn from £1.36bn the year before and was 10% higher than the first half of 2019.
Adjusted profit before tax soared 238% (+46% on 2019) to £54.8mln from £18.1mln the year before, while reported profit before tax nearly quadrupled to £52.4mln from £13.6mln the previous year.
The interim dividend has been hiked to 30p from last year’s 21p.
The shares have been on a good run since the company’s mid-July trading statement, however, and today’s announcement failed to live up to expectations, resulting in the shares ebbing 3.3% to 2,360p.
"We've had a very strong first half in which we've upgraded our profit guidance three times. We continue to make significant operational and strategic progress across the group. With such positive momentum across all our activities, I am excited by the opportunities ahead,” said John Morgan, the group’s chief executive.
“Today's results, combined with the current visibility for the rest of the year, gives us every confidence of another strong performance by the group in the second half,” he added.
Broker Peel Hunt has increased its target price to 2,700p from 2,400p, following what it called a “positive update” from the company.
The broker said a half-year profit before tax of £53.1mln is consistent with the unscheduled July trading update that triggered 15% upgrades to broker forecasts for 2021.
Peel Hunt’s forecast of full-year profit before tax of £122mln is a shade above the consensus forecast of £121.5mln.
The broker has raised its dividend forecast from 63p to 82p to reflect the new dividend policy. Morgan Sindall signalled its annual dividend would henceforth be somewhere between 40% and 50% of earning per share.
“The outlook remains positive with MGNS being able to manage the various impacts from material price inflation and materials shortages. The well bid and structured secured order book (u/c £8.3bn) supports the medium-term outlook,” Peel Hunt said.