MRO LN
Melrose Industries PLC
Industrial/Transportation
07/27/2023
Presented
| Date | 07/19/2023 |
| Price | £5.26 |
| Market Cap | $10.92B |
| Ent Value | $10.75B |
| P/E Ratio | N/A |
| Book Value | £5.28 |
| Div Yield | 1.33% |
| Shares O/S | 1,351.48M |
| Ave Daily Vol | 5,450,929 |
| Short Int | N/A |
Current
| Price | £4.18 |
| Market Cap | $8.27B |
| Melrose Industries Plc engages in manufacturing and industrial businesses, which operating in a number of different geographical regions and sectors. It operates through the following segments: Aerospace, Automative, Powder Metallurgy, Nortek Air Management, and Other Industrial. The Aerospace segment supplies multi-technology global tier for civil and defence airframes and engine structures. The Automative segment comprises Driveline, All Wheel Drive and eDrive, and Cylinder Liners businesses; a global technology and systems engineer, which designs, develops, manufactures and integrates an extensive range of driveline technologies. The Power Metallurgy segment consists precision powder metal parts for the automotive and industrial sectors, as well as the production of powder metal. The Nortek Air Management segment comprises the Group's Air Management businesses, which includes the Air Quality and Home Solutions business (AQH) and the Global Heating, Ventilation and Air Conditioning business (HVAC). The Other Industrial segment comprises the Group’s Ergotron, Brush, and Security and Smart Technology businesses. The company was founded in 2003 and is headquartered in London, the United Kingdom. |
Publicly traded companies mentioned herein: Melrose Industries PLC (MRO LN), MTU Aero Engines AG (MTX GR)
Highlights
The presenter is long shares of Melrose Industries PLC (MRO LN), a high quality company and one of the fastest growing aerospace businesses. MRO operates two segments: Engines makes up 38% of revenues and 83% of operating profits, and the airframes business called Structures makes up 62% of revenues and 17% of operating profits. He is bullish on both segments, believing the company can execute on its guidance to grow revenues from £3.4B in 2023 to £4B in 2025 and expand operating margins from 10% – 11% in 2023 to 17% – 18% in 2025. He expects further growth thereafter, ultimately reaching £1B of EBITDA in 2026 or 2027. This seems like a “buy, build, and sell” opportunity, and he considers it reasonable that the company could be sold in 3 – 5 years at a 12x EBITDA valuation, creating a price target above £8 per share compared to the current £5.28 per share.
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