I wonder what Jose Molins would think if he could see what happened to the business that started with him making cigars in Havana, Cuba in 1874.
His sons moved to London in 1911 and produced a machine that made packets for almost anything from cigarettes to tea.
The Molins Machine Company was started a year later, patenting the first cigarette maker in 1924.
Within four years their machine was able to make 1,000 cigarettes a minute.
In 1954 an industry changer came from a patent registered by the company in 1937 – it was the hinge-lid cigarette pack, which Philip Morris used to relaunch its Marlboro brand.
The success of this innovation saw the Molins company enjoy strong post-war expansion.
The group went public in 1976 and subsequently fought off a number of predatory takeover bids.
In 1985, its technology side was established and later produced the pyramid tea bag, another game changer, but one which boosted the consultancy business.
It was not until 2017 that the Molins Group decided to sell off its entire Instrumentation and Tobacco Machinery division and rebrand it as the Mpac Group.
And yes, this global leader in high-speed packaging and automation solutions which has grown so significantly over the decades, is yet another of my SQC stalwarts.
Its end-to-end manufacturing capabilities help leading food and beverage, healthcare and pharmaceutical businesses to meet their expanding objectives in a changing world, by designing and monitoring connected machinery – automation ecosystems – that optimise MPAC customers' manufacturing processes.
Tomorrow morning the group will declare its Interim Results to end-June.
We already have indications that the first half was in line with corporate expectations, with profits for the period looking to be substantially above the prior year and on track to meet market estimates for the full year.
CEO Adam Holland stated that:
"We are pleased to report that half-year trading is in line with the Board's expectations, leaving the Group well placed to meet full-year expectations.
The Group continued to gain momentum through the period and we will report a substantial increase in revenue and profitability in H1 2024 over H1 2023.
We have successfully built upon the foundations established last year, with further commercial and operational improvements in the period delivered by our highly valued team.
We are well positioned to succeed in the attractive markets in which we operate and deliver on our strategic objectives.''
For the current year to end-December analyst Sanjay Vidyarthi at Panmure Liberum has estimates out for sales of £120.0m (£114.0m), lifting pre-tax profits to £10.7m (£7.1m) and hoisting earnings to 38.9p (26.2p) per share.
For next year he goes for £129.0m group sales, £12.6m profits and 45.9p of earnings per share.
His Price Objective for the group’s shares is 550p.
Over at Shore Capital Markets, analysts Robin Speakman and Akhil Patel believe the group’s shares should be trading at a 600p ‘fair value’.
Their 2024 estimates are for £120.0m sales, £10.5m adjusted pre-tax profits and 38.7p earnings per share.
For 2025 they foresee £132.5m revenues, £12.3m profits and 44.6p in earnings.
After tomorrow’s Interim Results statement, market analysts may re-visit their numbers.
In the meantime, I will continue to rate highly this £96m capitalised group’s shares, as a Strong Hold at the current 470p.
(Profile 19.12.19 @ 182p set a Target Price of 235p*)
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