Melrose Industries (LN: MRO)

Currency in GBP

Last close As at 25/01/2023

GBP1.42

−2.65 (−1.83%)

Market capitalisation

GBP5,867m

Melrose Industries acquires underperforming industrial companies. It undertakes operational improvements through restructuring and investment before disposing of the assets. Deals are individually financed through new equity (and debt) with proceeds returned in cash post value realisation.

Interim results were in line with expectations with no change to full year guidance. Automotive margins made progress on H221 but were held back by the industry supply chain/chip issues and inflationary pressures, both of which are set to improve in H2. Aerospace margins continue to recover which, with restructuring programmes all now underway and the market starting to recover, bodes well for achieving targeted 14% margin.

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Industrials

Melrose Industries — Releasing the potential

Industrials

Melrose Industries — Two are better than one

Industrials

Melrose Industries — Aerospace rising

Sector

Industrials

Equity Analyst

David Larkam

David Larkam

Analyst, Industrials

Key Management

  • Christopher Miller

    Executive Vice Chairman

  • Geoff Martin

    FD

  • Simon Peckham

    CEO

Balance Sheet

Forecast net debt (£m)

1387

Forecast gearing ratio (%)

20

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 8.4 30.1 (4.9)
Relative 4.4 17.7 (7.2)
52 week high/low 165.8p/95.5p

Financials

Melrose has a proven track record for its ‘buy, improve, sell’ strategy having completed four transactions since 2005 generating an IRR for shareholders of c 20%. The latest transaction, GKN (acquired in 2018) is well advanced in restructuring, hence the decision to demerge the Automotive business to enable it to develop its EV opportunities as a standalone entity while Melrose/Aerospace is expected to be re-rated ex automotive and offer a platform for the next stage of Melrose development.

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2020A 7723.0 521.0 (41.0) (0.6) N/A 13.2
2021A 7496.0 734.0 252.0 4.1 34.6 9.1
2022E 7718.0 831.0 307.0 5.6 25.4 7.3
2023E 8334.0 1016.0 466.0 8.8 16.1 5.7

Thematics

Consumer

IPO apocalypse

TMT

ESG, moving beyond the box tick

Industrials

The emergence of mega-constellations

Industrials

Internet in the sky

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